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http://www.aph.gov.au/senate/committ...report/c06.htm
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6.21 In 1993, South Australian retailer, Mr Mark McLauchlan, saw an opportunity in Alice Springs to open an independent store in competition with Woolworths and Coles. Mr McLauchlan said that his price checks of Woolworths and Coles revealed that there were `very healthy margins and that perhaps we could go in there and make a statement about price and get a share of the business':
So we went in with a 35,000 square footer. I guess the mistake I made was making a big noise about how much cheaper we were going to be than Coles and Woolworths. We applied what was a normal retail margin in an Adelaide metropolitan store but with a freight component added in. We thought,
`We know we can run a business on these costs and that at that margin we will make a dollar'. We found that that was substantially cheaper than Coles and Woolworths, so we thought, `Here's an edge', and we really pushed it. Of course, what happened was that Coles and Woolworths overnight dropped their across-the-board pricing on every product in the store to a level that was equivalent to our cost price into the warehouse in Adelaide. [18]
6.22 Mr McLauchlan said that the store is now owned by Coles.
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What is this if not predatory pricing? I can only see significant consumer harm by these actions.
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Am I missing something? They found an edge where they were more efficient, and pushed that edge to outcompete the other players, resulting in lower prices for consumers from *all* vendors. They couldn't compete with the new lower prices, and got eliminated from the market.
What's "predatory" about this?
What's harming consumers?