Kamis, 30 Maret 2023

Predatory Pricing, Monopoly behind Online Shopping Promos

- Rabu, 2 November 2022 | 16:12 WIB
Ilustrasi E-commerce. Pixabay
Ilustrasi E-commerce. Pixabay

RADARDEPOK.COM - Who does not know the companies who dominate e-commerce in Indonesia; such as, shopee, Gojek, Tokopedia, Bukalapak, and other companies? They are well known and dominate the digital market in Indonesia.

Almost all of Indonesian knows Gojek, one of the main modes of transportation for the Indonesia. Furthermore, who does not know shopee, an online shopping site which is always bombarded with promos every month.

Meanwhile, in the field of education, we are familiar with platforms; such as, Ruangguru and Udemy which provide a variety of courses from various levels of education; besides, they can be accessed with just a few clicks through the users' mobile phone.

Not only from the consumer perspective, but producers are also spoiled by the development of the digital economy. In the absence of store rent fee, business pioneers can easily open their online stores simply by registering online. Only by uploading the required personal data, someone can open a shop and start trading on the same day. Moreover, marketing can be conducted on popular sites; such as, Tiktok, Instagram, Facebook and Youtube. All of these steps can be conducted—literally—in the palm of your hand. e-commerce has clearly helped boost the Indonesian economy.

As the digital-based economy increases, the opportunities for unfair business competition
also increase. The digital economy creates new business models and transaction methods which
lead to new business competition models. As digital users, we have certainly seen various
promos offered by various digital companies; for example, some online companies sometimes
provide promos by giving discounts to customers if they use certain payment methods.

The determination of the low price promo will certainly benefit consumers. However, indirectly,
these actions can kill competition and create a monopoly. Consumers who already depend on
low prices will become repeat customers. In addition, over a long period of time, after the
competitor is eliminated, the promo is removed and the price is finally raised to make up for the

This practice is called as predatory pricing, or the practice of “selling the loss” which is aimed at reducing competition. Contrary to the development of the digital economy which makes it easier for MSMEs, the practice of selling the loss can indirectly harm MSMEs and consumers
themselves. Furthermore, KPPU (Business Competition Supervisory Commission) in the
Guidelines for Compliance with Business Competition emphasizes to comply with Law number 5 of 1999 concerning the Prohibition of Monopolistic Practices and Business Competition. In Article 20, business actors are prohibited from setting very low prices with the intention of
eliminating and shutting down the businesses of their competitors which can cause monopoly.

However, Piter Abdullah as research director of CORE (Center of Reform Economics) Indonesia
stated that the practice of selling the loss is very difficult to prove. It is because there are many
players in the market. Discounts and promos can come from a variety of sources. It can be from the marketplace where the store comes from, the store itself, or the payment method service provider. It is very difficult to determine who actually conducted the practice of selling the loss. We need more specific regulations to handle this case of selling and losing practice.

From the producer's perspective, the dominant position in a competition has the potential
to create abuse; such as, “exploitative behavior”. This behavior is the ability of a company to
maintain prices above competitive levels for some period of time without worrying that consumers will switch to other products or worry that new competitors will enter the market.

The second abuse is called "exclusive behavior". It is the company's ability to dictate the level of
competition in the market by preventing the entry of efficient new competitor. This behavior
significantly harms equally efficient competitors by driving them out of the market or preventing
them from competing.

As we know that Indonesia has the goal of prospering MSMEs and Startups as an effort
to improve the economy. If predatory pricing or the practice of selling the loss is still active and
uncontrolled, MSMEs and startups which are creative and have quality products are threatened
with being eliminated. Unfair competition resulting from the practice of selling the loss can bury
the creativity of new business actors. Moreover, consumers will be stuck on one product which is already dominant without the possibility of getting a new kind of product. It is time for this
competitive space to be monitored in order to maintain the health of business competition in

If there are imported products which enter Indonesia offer big discounts in order to
get rid of competition, domestic businesses will be threatened since the market will be controlled
by these imported products. After all competitors are eliminated, they will freely raise prices since consumers have no other choice. It is very regrettable that practice of selling the loss is not
seriously monitored. Difficulties in handling the practice of selling the loss should not be an
obstacle to the creation of serious legal action.

From the consumer perspective, maybe with these discounts and promos they feel benefited. Who does not like prices below market? Promotions are now a common phenomenon.

Even for some people, promos are the heart of e-commerce itself. But who would have thought
that promos could be used as a tool to get rid of competitors and potentially create unhealthy
competition. If misused, promos can be a tool to create dependence on a product, as well as
become a barrier for consumers in order to get quality and competitive products.

Indeed, there are many aspects which should be considered in dealing with the practice of
selling the loss. However, it is not an obstacle to create a legal system for handling effective
trading practices. Advancement in technology and e-commerce create a very dynamic economic

As a consumer, both I and other consumers are probably used to seeing intense and massive promos. The thing that is feared is that later we will get too used to promos so that the practice of selling the loss is considered a reasonable thing.

Then, what can we do as consumers? As individuals and as part of social dynamics,
consumers have an impact in shaping market dynamics (Penaliza, Venkatesh, 2006). By
knowing the impact of predatory pricing, consumers can be more careful in consuming goods.

At least, with this knowledge, consumers are not easier to be 'manipulated'. This small role can have
a big impact on the health of market competition; besides, it has an impact on the health of
MSMEs in Indonesia. Furthermore, consumers have a big role since consumers are the main
object of every market. As the law of supply and demand, if the demand set by consumers is for
a 'healthy' product, then the product provided by producers will be in the form of a 'healthy'
product as well. Consumers actually have a big role to prevent this. The importance of education,
information, and knowledge of market economy can lead to the healthy economic circulation as

As one of the big pillars in the movement of the economy, consumers have a steering wheel
which can regulate the direction of the Indonesian economy. It is time for us as Indonesian
consumers to realize that social movements do not have to be conducted by demonstration and
taking it to the streets, but from the way we consume. (*)

Oleh : Siska Andrianika


Editor: Ricky Juliansyah



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