how to prevent low price dumping from a large competitor
Here is an example from history of how to prevent low price dumping from a large business competitor .
"Dumping" of products at extremely low cost is a way for large companies to drive smaller ones out of business . Then they can become the lone monopoly for that industry . The approach outlined below would not work for every product but it works fine with commodities . It was a strategy employed with great success by Herbert Henry Dow , founder of Dow Chemical .
With his new company and new technology, Dow was able to produce bromine very cheaply, and began selling it in the United States for 36 cents per pound. At the time, the government-supported German bromine cartel, Bromkonvention, had a near-monopoly on the supply of bromine, which they sold for 49 cents per pound. The Germans had made it clear that they would flood the American market with cheap bromine if Dow attempted to sell the element abroad. In 1904 Dow defied the cartel by beginning to export his bromine at its cheaper price to England. A few months later, an angry Bromkonvention representative visited Dow in his office and reminded him to cease exporting his bromine.[6]
Unafraid, Dow continued exporting to England and Japan. The German cartel retaliated by flooding the US market with bromine at a mere 15 cents a pound in an attempt to put him out of business. Dow, unable to compete with the attempt at predatory pricing in the U.S., instructed his agents to quietly buy up hundreds of thousands of pounds of the German bromine locally at the low price. The Dow company then turned the tables on the cartel by repackaging the bromine and exporting it to Europe, including Germany, at 27 cents a pound. The cartel, expecting Dow to go out of business, was unable to comprehend what was driving the enormous demand for bromine in the U.S.
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At the time the company Dow headed up was the small firm facing off against the Goliath sized German corporation . With this shrewd business strategy Dow prevailed against the big corporation and later it became the giant .