What is Price Fixing?

"Price fixing" is a conspiracy between business competitors to set their prices on products or services at a certain price point. Price fixing can happen in several ways. Businesses can agree to set their prices high so that consumers have no choice but to buy at a higher price, or they can agree to set mark-ups, sales, surcharges, or discounts at the same rate. Learn more about how to recognize price fixing in our legal guide below.

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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UPDATED: Jan 10, 2021

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Price fixing is a conspiracy between business competitors to set their prices to buy or sell goods or services at a certain price point. This benefits all businesses or individuals that are on the same side of the market and involved in the conspiracy, as product prices are either set high, stabilized, discounted, or fixed.

How Does Price Fixing Violate the Law?

In the United States, price fixing violates state and federal competition laws, which prohibit business collusion. Business collusion is an agreement between businesses that fraudulently prevents other businesses from being able to compete in the open market. Price fixing violates competition law because it controls the market price or the supply and demand of a good or service to customers. This prohibits other businesses, whether they are a supplier, producer, manufacturer, or retail seller, from being able to compete against the businesses in the price fixing agreement, which prevents the customers from being able to expect the benefits of price competition in a competitive market. This violation can be implied or express, with minimal evidence needed to prosecute participants with involvement in a price fixing scheme.

Even if there is evidence that competitors have appeared to agree on a price, this can lead to a collusion charge. Price fixing can be prosecuted federally as a criminal violation under the Sherman Antitrust Act or a civil violation under the Federal Trade Commission. Price fixing can also be prosecuted under state antitrust laws.

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How does Price Fixing Happen?

Price fixing in any segment of the supply chain can happen in several ways. Whether the business is a manufacturer, supplier, or retailer illegal agreements can occur to fix rates for maximum profit at the detriment of the customers. Businesses can agree to set their prices high so that consumers have no choice but to buy at a maximum price. They can also agree to set product mark-ups, maximum price, sales, surcharges, or a discount on goods or services at the same rate. Businesses can also agree to set their maximum purchasing price so that a seller of a product, service, or commodity will be forced to sell at identical prices. Price fixing can also happen in the credit market, where participants agree to standardize credit terms to consumers. Many states have “below sales-cost laws,” which prohibit businesses from selling goods or services below market cost if their intent is to create anticompetitive effects.

It is important to remember that an illegal price fixing situation only occurs when there is an agreement between businesses to fix prices. A business, acting on its own, may use legitimate efforts to obtain the best price they can, including the ability to raise prices for consumers. Further, businesses that conform to the same prices without an express or implied agreement are not in violation of United States price fixing laws. However, there is a fine line between conforming to prices at one’s own accord and having an implied agreement to do so.

Need to Get Help?

This information is only a brief summary of the extensive price fixing laws and applications. For further questions or to request information about price fixing or other antitrust violation pertaining to your specific case, you should contact an experienced business attorney.

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