# Is "charitable price dumping" legal? **URL:** \ **Category:** Factual Questions\ **Created:** [September 1, 2019, 12:36am UTC](https://boards.straightdope.com/t/is-charitable-price-dumping-legal/839537 "2019-09-01T00:36:58Z")\ **Posts on this page:** 11\ **Page:** 1
**Author:** ![Velocity](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/velocity/32/18006_2.png) [@Velocity](https://boards.straightdope.com/u/Velocity)\ **Post date:** [September 1, 2019, 12:36am UTC](https://boards.straightdope.com/t/is-charitable-price-dumping-legal/839537/1 "2019-09-01T00:36:58Z")
AIUI, it is not legal for big companies like Walmart to deliberately sell products super-cheap for the purpose of driving local competitors out of business. But can a wealthy benefactor price-dump for charitable motives? (Say, a billionaire San Franciscan considers Bay Area rent rates to be obscene and says “I’ll build 10,000 new apartment units and rent them all out to tenants at a mere $200 per month in order to force all landlords to drop their rates accordingly?”) ---
**Author:** ![ASL\_v2.0](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/asl_v2.0/32/3525_2.png) [@ASL\_v2.0](https://boards.straightdope.com/u/ASL_v2.0)\ **Post date:** [September 1, 2019, 3:48am UTC](https://boards.straightdope.com/t/is-charitable-price-dumping-legal/839537/2 "2019-09-01T03:48:11Z")
Is non-charitable price dumping in the context you describe illegal? I mean, I see that there are laws and international agreements related to exports, but so far the only reference I’ve been able to find to dumping as a prohibited activity has to do with international trade. In the case of your hypothetical billionaire white knight land lord, I’d imagine the local government (city council, planning board, whatever) would have something to say about it if the act of rock-bottom rents resulted in driving rental prices down city-wide, in turn probably driving property values down (because the property is less valuable if the owners make less money off of it) thereby driving property taxes down and ultimately tax revenues for the city. If there isn’t a law or ordinance against it already, I’d imagine they’d come up with something in a hurry. ---
**Author:** ![Xema](https://avatars.discourse-cdn.com/v4/letter/x/9de053/32.png) [@Xema](https://boards.straightdope.com/u/Xema)\ **Post date:** [September 1, 2019, 12:10pm UTC](https://boards.straightdope.com/t/is-charitable-price-dumping-legal/839537/3 "2019-09-01T12:10:11Z")
> [@Velocity](#): > > “I’ll build 10,000 new apartment units …”) I’d be impressed if anyone could do that anywhere near San Francisco for less than $300k per unit (indeed, the cost of the land could easily exceed that). So your billionaire better not be an ordinary one, to front $3+ billion for this project. As to the question of legality: I got nothin’ - though I expect minimum price laws are uncommon. ---
**Author:** ![Acsenray](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/acsenray/32/4519_2.png) [@Acsenray](https://boards.straightdope.com/u/Acsenray)\ **Post date:** [September 1, 2019, 12:57pm UTC](https://boards.straightdope.com/t/is-charitable-price-dumping-legal/839537/4 "2019-09-01T12:57:17Z")
Under the antitrust laws, a company may not use anticompetitive means to establish or maintain market power. And a company with market power may not use predatory pricing to harm competition. I don’t know if any agaritable intent exception to that, but I’m no expert in competition law. > **[United States antitrust law](https://en.wikipedia.org/wiki/United_States_antitrust_law)** > > In the United States, antitrust law is a collection of mostly federal laws that regulate the conduct and organization of businesses to promote competition and prevent unjustified monopolies. The three main U.S. antitrust statutes are the Sherman Act of 1890, the Clayton Act of 1914, and the Federal Trade Commission Act of 1914. These acts serve three major functions. First, Section 1 of the Sherman Act prohibits price fixing and the operation of cartels, and prohibits other collusive practices th... ---
**Author:** ![Flyer](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/flyer/32/7298_2.png) [@Flyer](https://boards.straightdope.com/u/Flyer)\ **Post date:** [September 1, 2019, 2:53pm UTC](https://boards.straightdope.com/t/is-charitable-price-dumping-legal/839537/5 "2019-09-01T14:53:06Z")
> [@Acsenray](#): > > Under the antitrust laws, a company may not use anticompetitive means to establish or maintain market power. And a company with market power may not use predatory pricing to harm competition. I don’t know if any agaritable intent exception to that, but I’m no expert in competition law. > > [United States antitrust law - Wikipedia](https://en.wikipedia.org/wiki/United_States_antitrust_law) There’s evidently significant limits to that rule, given the wide-spread and well-known use of loss leaders. ---
**Author:** ![Acsenray](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/acsenray/32/4519_2.png) [@Acsenray](https://boards.straightdope.com/u/Acsenray)\ **Post date:** [September 1, 2019, 4:06pm UTC](https://boards.straightdope.com/t/is-charitable-price-dumping-legal/839537/6 "2019-09-01T16:06:46Z")
> [@Flyer](#): > > There’s evidently significant limits to that rule, given the wide-spread and well-known use of loss leaders. It’s the other way around. Antitrust law creates a limitation on the use of loss leaders. ---
**Author:** ![Anny\_Middon](https://avatars.discourse-cdn.com/v4/letter/a/bc79bd/32.png) [@Anny\_Middon](https://boards.straightdope.com/u/Anny_Middon)\ **Post date:** [September 1, 2019, 5:34pm UTC](https://boards.straightdope.com/t/is-charitable-price-dumping-legal/839537/7 "2019-09-01T17:34:27Z")
> [@ASL\_v2.0](#): > > In the case of your hypothetical billionaire white knight land lord, I’d imagine the local government (city council, planning board, whatever) would have something to say about it if the act of rock-bottom rents resulted in driving rental prices down city-wide, in turn probably driving property values down (because the property is less valuable if the owners make less money off of it) thereby driving property taxes down and ultimately tax revenues for the city. If there isn’t a law or ordinance against it already, I’d imagine they’d come up with something in a hurry. Is that how property taxes work in some locales? Because around here, the entities that get property tax revenues establish what they need for the next year. (I’m sure there are checks and balances to prevent the school board from deciding $1 billion would be a good amount.) Then that total pie is divided by the total assessed property values to get the tax rate. That’s why a property with an assessed value of $400,000 might pay $4,000 in one community but $10,000 in another community within that state. I suspect there’s some governing mechanism within the state to prevent property taxes from being too large a percentage of property value, but in general taxes don’t go down in toto if property values decline. For example, assessed values declined significantly when the housing bubble burst, but my taxes didn’t go down at all. ---
**Author:** ![puddleglum](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/puddleglum/32/137_2.png) [@puddleglum](https://boards.straightdope.com/u/puddleglum)\ **Post date:** [September 3, 2019, 4:38pm UTC](https://boards.straightdope.com/t/is-charitable-price-dumping-legal/839537/8 "2019-09-03T16:38:39Z")
In most jurisdictions it is mandatory for any developers to build a certain amount of below market rate housing in order to be able to get permission to build market rate housing. ---
**Author:** ![zimaane](https://avatars.discourse-cdn.com/v4/letter/z/a3d4f5/32.png) [@zimaane](https://boards.straightdope.com/u/zimaane)\ **Post date:** [September 4, 2019, 3:47pm UTC](https://boards.straightdope.com/t/is-charitable-price-dumping-legal/839537/9 "2019-09-04T15:47:34Z")
Some nonprofit organizations build or renovate homes which they then rent out at below market rates, and this seems to be generally legal. I’d assume your hypothetical billionaire’s plan would be too. Of course getting planning approval to build 10000 apartment units in the Bay area would be a herculean task, but the objections would be nominally based on other considerations like traffic or crowding in schools. ---
**Author:** ![puddleglum](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/puddleglum/32/137_2.png) [@puddleglum](https://boards.straightdope.com/u/puddleglum)\ **Post date:** [September 4, 2019, 6:02pm UTC](https://boards.straightdope.com/t/is-charitable-price-dumping-legal/839537/10 "2019-09-04T18:02:42Z")
Many charities operate stores selling donated items at very cheap prices to fund their operations. ---
**Author:** ![lingyi](https://avatars.discourse-cdn.com/v4/letter/l/d2c977/32.png) [@lingyi](https://boards.straightdope.com/u/lingyi)\ **Post date:** [September 4, 2019, 11:28pm UTC](https://boards.straightdope.com/t/is-charitable-price-dumping-legal/839537/11 "2019-09-04T23:28:28Z")
In the late 80’s, Japanese billionaire Genshiro Kawamoto spent 10’s of millions of dollars on homes in two of the most elite neighborhoods in Oahu, Hawaii, paying above market price for some. He rented some of the homes to homeless native Hawaiian families, demolished some and and let others fall in to disrepair. Speculation was that he was trying to drive down the prices in the neighborhoods and buy more properties. No one was sure if he was a saint or demon. He made promises to fund affordable housing in Hawaii, but never followed through. From a 2014 Honolulu Magazine article: “Constant pressure from Kahala residents eventually led the Honolulu City Council to create a new property blight law, dubbed the Kawamoto Bill, which raised the fine for unresolved property neglect violations from $1,000 a day to $5,000 a day. It’s unclear if that got Kawamoto’s attention or whether the timing was coincidental, but the month after the fines went into effect, Alexander & Baldwin announced it had bought Kawamoto’s properties.” A 2007 interview with him from the same article: "Kawamoto could not be reached for this story, but HONOLULU Magazine got an exclusive interview with him in 2007, when he was happily still talking about his Kahala Avenue Mission. At the time, he planned to put Hawaiian families in at least eight homes. “So the eight families, say they have 50 relatives and friends each, that will bring another 400 people to visit Kahala Avenue and have parties,” he said. “I want that community of 400 to play on the beach. That’s what I really wanted. If every weekend, a couple of hundred people visit the families and have fun, the project will be successful.” When we asked Kawamoto what drives his Hawaii real estate decisions, he said: “I don’t actually think of what I do as a business. It’s a game. If there’s something I’m interested in, I just do it. Maybe you want to ask me why I’m giving away so many millions now on Kahala Avenue and not asking for anything back—do you want to ask me?” We did, and so—after Kawamoto explained that he only uses his private money in Hawaii, never his business’ money—he said: “The whole point of the homeless people is because I wanted to do something fun with the money. The hundreds of millions don’t really matter to me. I just want the families to be happy and have fun.” When we asked him about his hobbies, he said he enjoys gardening and “styling and decorating” his houses. Then he said this: “Maybe you can say Kahala Avenue is my hobby, too. Instead of styling a house, I’m styling a town. I’m styling Kahala Avenue.” Now, a decade after his grand makeover project began, Kahala Avenue is free to return to its original style. " Source:[http://www.honolulumagazine.com/Honolulu-Magazine/January-2014/The-Worst-Neighbor-on-the-Block-Genshiro-Kawamoto/index.php?cparticle=1&siarticle=0#artanc](http://www.honolulumagazine.com/Honolulu-Magazine/January-2014/The-Worst-Neighbor-on-the-Block-Genshiro-Kawamoto/index.php?cparticle=1&siarticle=0#artanc) “Although these homes are vacant, boarded up and often vandalized, their estimated total value is $200 million.[3] In September 2013, Kawamoto sold all of his Hawaii assets to Alexander and Baldwin for $128 million.” Source: [https://en.wikipedia.org/wiki/Genshiro\_Kawamoto](https://en.wikipedia.org/wiki/Genshiro_Kawamoto) In 2018, he was convicted and sentenced to jail for tax evasion in Japan. Source: [https://www.tokyoreporter.com/crime/ginzas-property-king-handed-4-year-term-for-tax-evasion/](https://www.tokyoreporter.com/crime/ginzas-property-king-handed-4-year-term-for-tax-evasion/)