Price-fixing agreement

 

Institution Definition

An agreement between sellers to raise or fix prices in order to restrict inter- firm competition and earn higher profits. Price fixing agreements are formed by firms in an attempt to collectively behave as a monopoly. © OECD

Price fixing is an agreement (written, verbal, or inferred from conduct) among competitors that raises, lowers, or stabilizes prices or competitive terms. Generally, the antitrust laws require that each company establish prices and other terms on its own, without agreeing with a competitor. When consumers make choices about what products and services to buy, they expect that the price has been determined freely on the basis of supply and demand, not by an agreement among competitors. When competitors agree to restrict competition, the result is often higher prices. Accordingly, price fixing is a major concern of government antitrust enforcement. © Federal Trade Commission

See also Cartel and Bid-rigging

 
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