Public Comment

Judging the Monterey Market: Another Point of View

By Ruchama Burrell
Tuesday December 20, 2011 - 09:35:00 PM

Mr. Rosenberg's remarks about the dispute between Monterey Market and its neighboring businesses ignores the history of laws against unfair competition and "loss leaders," that have been in place in California since 1933. It is illegal to sell items at below cost (including overhead and business expenses) in order to drive a competitor out of business. 

Unfortunately, the desire to drive someone out of business must be a "conscious purpose." Monterey Market may be selling items at below its cost in order to bring in more customers or to drive is competitors out of business. The former is legitimate and the latter illegal. No lawsuit is likely to be filed in order to find out the Market's intent. It is extremely difficult to prove "conscious intent." 

Even without such an intent, the resulting closing of nearby businesses is a serious issue. Selling below cost is commonly referred to as "predatory pricing." This gives a short term advantage to the buyer, but does long term harm to the economy and ultimately the customer, because selling below cost is unsustainable in the long run. Once the competitor is out of business, the predator can charge what it pleases. 

I don't know the facts, so I don't presume to judge whether Monterey Market's pricing is predatory; but I don't buy into the idea that any practice that lowers prices to consumers is a good thing. Business prosper better when they are located near other similar thriving businesses, even if they compete. That's why shopping centers were created. Empty store fronts are bad for business, and ultimately bad for the economy, including customers. 

Here's a link that gives a brief rundown on the issue of predatory pricing.