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Price Fixing: What It Means and Why It Matters in Antitrust Law
Definition & Meaning
Price fixing refers to a situation where competing businesses secretly agree to set prices for their products or services. This practice is designed to eliminate competition and maintain higher prices. Price fixing is considered a violation of federal antitrust laws, which aim to promote fair competition in the marketplace. It can also involve arrangements between suppliers and favored manufacturers or distributors to establish prices that undermine competition.
There are two main types of price fixing:
Vertical price fixing: This occurs between different levels of the supply chain, such as manufacturers and retailers.
Horizontal price fixing: This involves direct competitors colluding to set prices, which is illegal under antitrust laws.
Table of content
Legal Use & context
Price fixing is primarily relevant in the context of antitrust law, which governs competitive practices among businesses. Legal professionals may encounter price fixing in civil litigation involving claims of unfair competition or in criminal cases where businesses are prosecuted for violating antitrust regulations. Users may find it beneficial to utilize legal templates from US Legal Forms to navigate related legal procedures.
Key legal elements
Real-world examples
Here are a couple of examples of abatement:
Example 1: A group of local gas stations agrees to charge the same price for gasoline to avoid competing on price, which can lead to higher prices for consumers. (hypothetical example)
Example 2: A manufacturer sets a minimum price that retailers must charge for its products, preventing retailers from offering discounts to attract customers. (hypothetical example)
Relevant laws & statutes
The primary federal law governing price fixing is the Sherman Antitrust Act, which prohibits contracts, combinations, or conspiracies that restrain trade. Additionally, the Federal Trade Commission Act addresses unfair methods of competition, including price fixing practices.
Comparison with related terms
Term
Definition
Key Differences
Price Fixing
Collusion among businesses to set prices.
Directly involves agreements between competitors.
Price Discrimination
Charging different prices to different consumers for the same product.
Does not necessarily involve collusion; can occur independently.
Market Allocation
Agreement among competitors to divide markets or customers.
Focuses on dividing territories rather than setting prices.
Common misunderstandings
What to do if this term applies to you
If you suspect that you are affected by price fixing, consider the following steps:
Document any evidence of price agreements or collusion.
Consult with a legal professional who specializes in antitrust law.
Explore US Legal Forms for templates that may assist in filing complaints or legal actions.
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