Originally Posted by
MickG0105
The legality of pricing strategies under the Competition and Consumer Act 2010 largely comes down to a matter of intent. Generally it's not illegal to sell an item 'below cost', particularly if that decision forms part of a legitimate marketing strategy such as attracting new customers and gaining market share. Similarly, it is not illegal for Qantas and Virgin to match Rex's prices so long as their intent is simply to protect their business.
It would have been illegal if Qantas had have rolled out $39 fares that started a week before Rex launched and then carried on selling them till say the end of the year. That would likely meet the three elements of the test for predatory pricing, specifically that Qantas:
a. had substantial market power,
b. that the pricing strategy had an anti-competitive purpose, and
c. that the very low prices were sustained.
The fact that it is Rex who is leading the charge on low prices essentially absolves Qantas and Virgin from any entanglements when they price match. Just another master-stroke from dumb as a bag of hammers Sharp and Co. in Rex's self-induced exsanguination.
Thanks for the explanation. So essentially, Rex is doing Qantas and Virgin a favour? They can beat these low price wars and do so quicker if rex is giving them the tools! Hilarious.