i see you re point, but i'm not sure i agree.
i don't like undercutting because it's really the worst form of competition. its competing purely on price, and this drives down prices in an area. i understand why people are tempted to do it, but i think that it is generally inexperience or unprofessionaliasm that drives it.
another thing of course is illegal workers competing with professional workers. so us with overheads such as employees, insurance, VAT, tax etc etc are having prices working by people working for cash, or on benefits.