Price fixing

Most agreements between business competitors regarding the pricing of a product is considered price fixing and are illegal in many countries.

Related Topics:
Pricing - Product

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Methods of price fixing can include;

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• Agreements to adhere to a price book.
• Agreements to engage in cooperative price advertising.
• Agreements to standardize credit terms offered to purchasers.
• Agreements to use uniform trade-in allowances.
• Agreements to limit discounts.
• Agreements to discontinue free service or to fix any other element of prices.
• Agreements to adhere to previously announced prices and terms of sale.
• Agreements establishing uniform costs and markups.
• Agreements imposing mandatory surcharges.
• Agreements to reduce output or sales.
• Agreements to share markets, territories, or customers.

In the United States, unlike many countries, price fixing can be prosecuted as a felony. Under U.S. law, price fixing is only illegal if it comes about via communication and specific agreement between firms. It is not illegal for a firm to copy the price movements of a de facto market leader (called price leadership). This has frequently been seen to be the case in the markets for breakfast cereals and cigarettes.

Related Topics:
United States - Felony - Market leader - Price leadership

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Bid rigging is considered a form of price fixing and is illegal in the United States.

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Price fixing is often practiced internationally. When the agreement to control price is sanctioned by a multilateral treaty or is entered by sovereign nations, as opposed to individual firms, the cartel may be protected from lawsuits and criminal antitrust prosecution. This explains, for example, why OPEC, the global oil cartel, has not been prosecuted or successfully sued under U.S. antitrust law. Also international airline tickets have prices fixed by agreement with the IATA, a practice for which there is a specific exemption in antitrust law.

Related Topics:
Treaty - OPEC - Oil - Cartel - Antitrust - IATA - Antitrust law

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International price fixing by private entities can be prosecuted under the antitrust laws of many countries. Examples of prosecuted international cartels are those that controlled the prices and output of lysine, citric acid, graphite electrodes, and bulk vitamins. (source: http://agecon.lib.umn.edu/cgi-bin/pdf_view.pl?paperid=5488&ftype=.pdf)

Related Topics:
Lysine - Citric acid - Vitamins

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Price fixing: See also ►