Editing Predatory pricing (section)

== Criticism ==
According to economist Thomas DiLorenzo, true predatory pricing is a rare phenomenon and an irrational practice with laws designed to inhibit competition.<ref name="DiLorenzo" /> According to the European Commission, this is because predatory pricing can cause firms to make a loss due to increased output.<ref name="European Commission"/> This stance was taken by the [[Supreme Court of the United States|US Supreme Court]] in the 1993 case ''Brooke Group v. Brown & Williamson Tobacco.'' The [[Federal Trade Commission]] has not successfully prosecuted any company for predatory pricing since.

[[Thomas Sowell]] explains one reason why predatory pricing may not be completely effective:
:''Obviously, predatory pricing pays off only if the surviving predator can then raise prices enough to recover the previous losses, making enough extra profit thereafter to justify the risks. These risks are not small.''
:''However, even the demise of a competitor does not leave the survivor home free. Bankruptcy does not by itself destroy the fallen competitor's physical plant or the people whose skills made it a viable business. Both may be available-perhaps at distress prices-to others who can spring up to take the defunct firm's place.''
:''The Washington Post went bankrupt in 1933, though not because of predatory pricing. But neither its physical plant, its people, or its name disappeared into thin air. Instead, publisher Eugene Meyer acquired all three-at a fraction of what he had bid unsuccessfully for the same newspaper just four years earlier. In the course of time, the Post became the biggest newspaper in Washington.''<ref name="Predatory prosecution - Forbes.com">{{cite web|url=https://www.forbes.com/forbes/1999/0503/6309089a.html|title=Predatory prosecution|first=Thomas|last=Sowell|website=[[Forbes]]|date=May 3, 1999|access-date=September 8, 2017|archive-date=July 29, 2017|archive-url=https://web.archive.org/web/20170729210926/https://www.forbes.com/forbes/1999/0503/6309089a.html|url-status=live}}</ref>

Critics of laws against predatory pricing may support their case [[empirical method|empirically]] by arguing that there has been no instance where such a practice has actually led to a monopoly.<ref>J. Gregory Sidak, Debunking Predatory Innovation, 83 COLUM. L. REV. 1121, 1121 (1983).</ref> Conversely, they argue that there is much evidence that predatory pricing has failed miserably. For example, [[Herbert Dow]] not only found a cheaper way to produce [[bromine]] but also defeated a predatory pricing attempt by the government-supported German [[cartel]] Bromkonvention, who objected to his selling in [[Germany]] at a lower price. Bromkonvention retaliated by flooding the US market with below-cost bromine, at an even lower price than Dow's. However, Dow simply instructed his agents to buy up at the very low price and then sell it back in Germany at a price still lower than Bromkonvention's. In the end, the cartel could not keep up with selling below cost and had to surrender in the price war. This was used as evidence that the [[free market]] is a better way to stop predatory pricing than [[regulation]]s such as [[anti-trust]] laws.

In another example of a successful defense against predatory pricing, a [[price war]] emerged between the [[New York Central Railroad]] (NYCR) and the [[Erie Railroad]].  At one point, NYCR charged only a dollar per car for the transport of cattle. While the cattle cars quickly filled up, management were dismayed to find that Erie Railroad had also invested in the cattle-haulage business, making Erie a buyer of cattle transport, and thus profiting from NYCR's losses.<ref>Maury Klein. ''The Life and Legend of Jay Gould''.</ref>

Sowell argues:
:''It is a commentary on the development of antitrust law that the accused must defend himself, not against actual evidence of wrongdoing, but against a theory which predicts wrongdoing in the future. It is the civil equivalent of "[[preventive detention]]" in criminal cases—punishment without proof.''<ref name="Predatory prosecution - Forbes.com"/>