Page 7: A fair deal in the market place
Markets work well providing buyers and/or sellers do not take advantage of their position. An example of this is 'predatory pricing' - where a business charges consumers artificially low prices in order to reduce or destroy the profitability of competitors. A business is able to dominate the market in this way.
In September 2002 the OFT ruled that Aberdeen Journals had a dominant position in the market for local newspaper advertising in Aberdeen and had engaged in predatory pricing. Predatory pricing typically involves a firm deliberately making short-term losses in order to eliminate a competitor so as to be able to charge higher prices in the future.
The OFT found that Aberdeen Journals was acting unlawfully by significantly lowering the price of advertising space in its weekly free newspaper in response to the launch of a rival free paper in 1996. The practice continued after the Competition Act came into force on 1st March 2000. Aberdeen Journals appealed against the original ruling but the Competition Appeal Tribunal upheld it. A penalty was levied against Aberdeen Journals of £1 million.