Dumping is a commercial practice considered illegal in international trade, which consists of selling a product at prices below cost in order to eliminate competition and take over the entire market.

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It is an Anglo-Saxon term derived from the term “dump” which means to pour or spill and is used as a synonym for selling below the manufacturing cost price with the intention of bursting the market and competition.

It is a practice that consists of selling in a country below production costs. Many times, it is sold cheaper abroad than in the country itself.

If any company observes dumping it can report it to GATT (General Agreement on Tariffs and Trade, in Spanish, known as General Agreement on Trade and Tariffs).

Types of dumping

Sporadic: It is when the sale at a loss is made due to the existence of surpluses in the production of a domestic market, so in order not to unbalance the internal market, these surpluses are diverted to the international market at the price below cost.

Predatory: It is the one understood as unfair competition practice. It consists of selling at a loss, in the external market, gaining access to that market and thus excluding competition. Subsequently the price is increased again to obtain profits, once the monopoly is already held.

Persistent: Continuous practice of exporting below prices to gain a market, taking advantage of the existence of differences in the price elasticity of demand of the internal market against that of export.

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