Price fixing refers to an agreement between competing sellers to sell the same product or service at the same price or to maintain a specific pricing structure.
- Done directly or indirectly through mechanisms like cartels, trade associations, etc.
- Eliminates price competition and restricts free market pricing
- Can involve coordinating output levels to indirectly control pricing
Examples include agreements to hold prices above or below competitive market rates, establishing minimum or maximum transaction prices.
Price fixing is considered an illegal anti-competitive practice under antitrust laws in most countries as it distorts markets, harms consumers, and restricts economic freedom.
The intent is to artificially manipulate prices for profits rather than letting market demand and competition determine fair pricing.
Authorities monitor for red flags like consistent identical pricing, price-signaling conduits, and incentives for collusive rather than independent decision making.
Overall, price fixing undermines the economic efficiencies intended from free markets and open competition between vendors.