An Agreement Among Competitors To Establish Price Ranges
Other agreements between competitors, which are not inherently harmful to consumers, are examined according to a flexible “common sense rule” that attempts to determine their overall effect on competition. The focus here is on the nature of the agreement, the harm that might occur and the reasonable need for the agreement to gain competitive advantages. A clear agreement between competitors to set prices is almost always illegal, whether prices are set at the minimum, maximum or in a given area. Illegal price cartels occur whenever two or more competitors agree to take measures that result in an increase, reduction or stabilization in the price of a product or service without legitimate justification. Price agreements are often developed in secret and can be difficult to detect, but an agreement can be reached from “clues”. For example, if direct competitors have a model of unexplained identical contractual terms or pricing behaviour, as well as other factors (such as the lack of a legitimate business statement), the reason may be an illegal price cartel. Invitations to price coordination may also give rise to concern, for example. B where a competitor publicly announces that it is prepared to end a price fight if its competitor is willing to do the same and the conditions are sufficiently specific for competitors to regard this as a common price indication offer. In addition, some concerns have been raised about the prohibition of horizontal pricing agreements in contexts where it is difficult for consumers to assess the quality of goods or services on their own. When it comes to medical care, for example, patients are often not able to assess for themselves whether the care is of high or low quality. (Quality care does not guarantee good outcomes, and patients who have received poor quality treatment can still be improved.) If quality care is difficult to recognize, both in the supply and for consumers, strong price competition will take quality care out of the market. Patients no longer pay for a difference in care that they cannot recognize or verify. On the other hand, if price competition is minimized by horizontal agreements, the pressure to reduce costs through quality reductions will be reduced.
In its most common form, pricing is an agreement to increase the price of a product or service on or around a certain amount, for example.B. all widget manufacturers accept a 5 percent price increase starting June 1. Other manifestations of price-fixing are: identification of market allocation activities: in addition to price fixing and supply manipulation, market sharing agreements may be found between competitors. . . .