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What is price fixing, and why is it illegal?

On Behalf of | Jan 4, 2019 | Litigation

The federal government has enacted antitrust laws in order to protect consumers in New York and across the country. You may be wondering how these laws affect your retail company, particularly in regard to price fixing. Here is what the Federal Trade Commission has to say about this illegal behavior.

One of the guiding principles of capitalism is that competition in the marketplace protects consumers by keeping prices reasonable so that goods and services are affordable. So, it is illegal for you and your competitors to collaborate in some way to control the price of a product that you all carry on your shelves. The outcome of the agreement could be to raise prices, but it could also be to lower them or stabilize them. The key is to act so the normal effects of the marketplace due to supply and demand do not influence the price of the product.

The FTC does not have to uncover a written agreement between you and a competitor to determine that prices have been fixed illegally. An investigation could result in an inference that the agreement exists based on the established conduct of the companies involved. Even armed with only circumstantial evidence, the FTC could take action against a company. However, obviously, just because you and a competitor consistently have similar pricing structures does not mean you are in league together to control the market. Price fixing can be very difficult to prove in court.

This information regarding price fixing is general in nature, and should not be interpreted as legal advice.