The Implications of Price-Fixing

Price-Fixing is a type of anti-competitive agreement where participants in a market agree to buy or sell a product at a fixed price. This anti-competitive practice limits competition by controlling the supply and demand. Price-fixing has many implications, and must be avoided if competition is to be preserved.

The most common form of price-fixing involves the agreement of two or more companies in the same industry to keep prices constant. This agreement is usually verbal or can be implied. Often, the goal of price fixing is to reduce competition, and to set prices below market value. The price-fixing practice is illegal.

Price-fixing is illegal in Canada. It involves agreements between suppliers, manufacturers, and retailers that limit the prices of their products. They may also agree to charge a minimum resale price for their products. This practice is prohibited by competition law and can result in a fine of up to $25 million or even 14 years in jail.

Another type of price-fixing is horizontal. This occurs when all participants in the supply chain agree to fix prices, usually between manufacturers and retailers. An example of this would be a company making widgets agreeing not to build any new apartment buildings, so that the price of its products can remain stable. However, in some cases, horizontal price-fixing can occur between competitors in a given product or service sector. This form of price-fixing is more common in organizations dealing with petroleum exporting nations.

In addition to criminal penalties, price-fixing can also result in fines of up to $100 million. In some cases, executives of companies have been convicted of price-fixing, and have been sentenced to jail. The FTC may also pursue civil enforcement action against companies that engage in price-fixing.

Price-fixing is illegal in two forms: horizontal and vertical. Horizontal price-fixing involves agreements among competitors to fix prices on a minimum price or maximum price. This type of price-fixing can also involve agreements between competitors about other terms. For example, music labels in the 90s agreed not to reduce the prices of compact discs.

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