Wal Mart Trial on Predatory Pricing

Satisfactory Essays
CASE #3
Wal-Mart on Trial on 'Predatory Pricing' Charges
-------------------------------------------------

Wal-Mart Stores Inc. and its pricing practices went on trial in an Arkansas courtroom, where three independent pharmacies are trying to prove that the nation's largest retailer sold merchandise below its costs in an effort to drive competitors out of business. The retail druggists in Conway, Ark., north of Little Rock, contend that their business suffered from Wal-Mart's "predatory prices" on items ranging from toothpaste to mouthwash to over-the-counter drugs sold at its Conway superstore.
The pharmacies charged that Wal-Mart violated the Arkansas Unfair Practices Act, which forbids selling merchandise below cost "for the purpose of injuring competitors and destroying competition." They are seeking $1.1 million in damages.
In court papers, Wal-Mart has acknowledged selling some products for less than they cost, but insists that the policy has not damaged competition in the Conway area.
"It would be better if you could make a profit on everything you sell, but in the real world, that isn't possible," David Glass, Wal-Mart's president and chief executive, testified in Faulkner County Chancery Court in Conway. "That's the principal reason why we do it." Ripple Effect Expected.
But Dwayne Goode, owner of American Drugs Inc. of Conway, one of the stores that filed the civil suit in 1991, testified that he shopped at Wal-Mart for certain merchandise for his store because it was cheaper than wholesale prices. He said Wal-Mart's pricing had a "very negative effect" on his pharmacy and that he had lost customers.
The trial is being watched by retailing analysts and trade associations, who say a decision against Wal-Mart could have ripple effects for other retailers that price aggressively.
"It would set a major retailing precedent that other companies would have to stand and fight against," said John R. Lawrence of Principal/Eppler Guerin & Turner

You May Also Find These Documents Helpful

  • Good Essays

    Predatory Pricing

    • 16100 Words
    • 65 Pages

    Quo vadis? Towards an effective predatory pricing provision Garth Campbell* The level of criticism directed at s 46 of the Trade Practices Act 1974 (Cth) for its inability to capture predatory pricing indicates that smaller businesses are extremely concerned about this practice. Such criticism reached its peak following the High Court’s decision in Boral Besser Masonry Ltd v ACCC (2003) 215 CLR 374, which rejected a claim of predatory pricing. Since then, the Birdsville Amendment and other recent…

    • 16100 Words
    • 65 Pages
    Good Essays
  • Good Essays

    Predatory Pricing

    • 418 Words
    • 2 Pages

    Predatory pricing is a practice in which a company attempts to gain control of a market by cutting its prices to levels well below those of competitors, so that those competitors go out of business because they cannot match those prices, or they cannot sustain lowered prices because they lack capital. This tactic is illegal in many regions of the world, although it can be very difficult to prove that a company is really engaging in predatory pricing. Some economists have suggested that this practice…

    • 418 Words
    • 2 Pages
    Good Essays
  • Good Essays

    Predatory Pricing

    • 14942 Words
    • 60 Pages

    Abuse of dominance: Predatory Pricing Submitted by: Radhika Sahay (Intern; May 2012 – June 2012) ------------------------------------------------- DISCLAIMER 4 ACKNOWLEDGEMENT 5 CASES 6 LIST OF BOOKS, JOURNAL ARTICLES, REPORTS 8 LIST OF STATUTES REFFERED 11 CHAPTER1: BACKGROUND 12 CHAPTER 2: ABUSE OF DOMINANCE 15 2.1 Relevant Market: 16 2.2 Dominant Position: 20 a. Indian Position on indentifying “dominance” 20 DEFINITION OF DOMINANCE AND KEY ELEMENTS: 22 IMPORTANCE…

    • 14942 Words
    • 60 Pages
    Good Essays
  • Better Essays

    Wal-Mart

    • 4139 Words
    • 17 Pages

    REPORT: WAL-MART LOW-COST STRATEGY ANALYSIS Lecturer: Mr. Le Dang Hoang Tutor:Ms. Do Thi Ha Lan Tut 1TR10 Group member: Tran Viet Anh 1006090006 Nguyen Tra My 1006090034 Dao Minh Tam 1006090045 Cao Thi Thuong 0907010220 Table of content Introduction 3 I.The implementation of strategy in the company 4 II. Archievement of Wal-Mart thanks to low-cost strategy 8 III. Competition of Wal-Mart with rivals 9 a. Rivals reactions to Wal-Mart strategy 9 b. Wal-Mart’s…

    • 4139 Words
    • 17 Pages
    Better Essays
  • Powerful Essays

    Wal-mart

    • 1659 Words
    • 6 Pages

    Introduction: WAL-MART is the largest revenue earning public corporation and a regularly featured organization on fortune 500 list. Wal-Mart Stores, Inc. or Wal-Mart is an American public corporation that runs a chain of large, discount department stores. It is the world 's largest public corporation by revenue, Founded by Sam Walton in 1962, it was incorporated on October 31, 1969, and listed on the New York Stock Exchange in 1972. It is the largest private employer in the world and the fourth…

    • 1659 Words
    • 6 Pages
    Powerful Essays
  • Powerful Essays

    into pricing strategies of Wal-Mart in China Module Leader: Gunjan Saxena Student ID: 200912567 Date: 17/05/2009 Executive Summary The report is an investigation about Wal-Mart’s pricing strategies in China, which consists of three parts. The part 1 includes five points relevant information. To begin with, it will have an introduction for this investigation to assess the brief of Wal-Mart and its pricing strategies in China. The next is setting up one main aim of investigation Wal-Mart’s…

    • 6360 Words
    • 26 Pages
    Powerful Essays
  • Satisfactory Essays

    Wal-Mart

    • 621 Words
    • 2 Pages

    #1 09/09/2014 Wal-Mart Case The retail industry is dominated by few retail giants, with Wal-Mart competing in several retail categories. Wal-Mart competes against Kmart and Target in general merchandise retailing; against Costco in the warehouse club segment; and other Safeway in the supermarket retailing. Competition among retailers centers on pricing, store location, variations in store format and merchandise mix, store size, shopping atmosphere, and image with shoppers. Wal-Mart with a marketing…

    • 621 Words
    • 2 Pages
    Satisfactory Essays
  • Powerful Essays

    Wal-Mart

    • 1778 Words
    • 7 Pages

    INTRODUCTION Wal-Mart is a company based in North America but has become the largest retailer and is larger than any other retail chain in the world. It is clear that Wal-Mart is growing and gaining international power at an alarming rate. Wal-Mart journey from humble beginnings in the 1960s as a folksy discount retailer in the boondocks of Arkansas to a global retailing juggernaut in 2008 was unprecedented among the company of the world: Sales were expected to exceed $400 billion in fiscal 2009. Wal-Mart…

    • 1778 Words
    • 7 Pages
    Powerful Essays
  • Good Essays

    Wal Mart

    • 1048 Words
    • 5 Pages

    rtWal-Mart 2) Wal-Mart does very well when the economy turns sour. How can it protect itself when the economy is on the rise? Explain. Wal-Mart can protect itself through a few strategies. First of all, they can start by building a wider product portfolio. Wal-Mart can try to bring in more products and add more variety to its offerings. The more products that are offered, the more customer base that can be captured. With the existing products, Wal-Mart can add on more varieties for their customers…

    • 1048 Words
    • 5 Pages
    Good Essays
  • Good Essays

    Wal-Mart

    • 410 Words
    • 2 Pages

    Wal –Mart Stores Inc, The world largest retailer is possibly the most controversial business in America. With sales over $312,000 billion in 2006 and 1.7 million employees worldwide managing stakeholder relationship is a major challenge. The Wal-Mart that saves the average family an estimated $2329 per year has its critics. Wal-Mart claims that it is committed to improving the standard of living for their customers throughout the world. It has estimated that Wal-Mart saves consumers $100,000 billion…

    • 410 Words
    • 2 Pages
    Good Essays