Restrictive pricing policies of transnational corporations

Restrictive business practices arise in the context of the pricing policies of transnational corporations in two ways: the prices charged for the products sold on domestic markets; and the prices charged for the products supplied by way of intra-company transactions within the corporation (including affiliates).

Regarding the prices it charges on domestic markets, an important element is the corporation's ability to isolate one market from another by way of its territorial market allocation arrangements and associated restrictive practices. To the extent that it holds a monopoly or near monopoly position in a market, the prices charged will essentially be what the corporation considers each market will bear and, as such, can involve abuse of market power. Where a transnational corporation finds itself in an oligopoly market situation, it can use its market power in either of two ways. First it can set prices at such a level that its competitors will follow suit (namely price leadership). Alternatively, it can deliberately adopt lower prices than its competitors, and, if necessary, sustain losses for the sale of the product in question, with the object of increasing its market share and perhaps eliminating certain of its competitors. The latter is frequently called predatory pricing.