![]() The optometrists refused to treat patients covered by the network plan, and, eventually, the company raised reimbursement rates. Defendants may not justify their behavior by arguing that the prices were reasonable to purchasers, were necessary to avoid cut-throat competition, or stimulated competition.Įxample: A group of competing optometrists agreed not to participate in a vision care network unless the network raised reimbursement rates for patients covered by its plan. Terms or conditions of sale, including credit termsĪ defendant is allowed to argue that there was no agreement, but if the government or a private party proves a plain price-fixing agreement, there is no defense to it.Antitrust scrutiny may occur when competitors discuss the following topics: Price fixing relates not only to prices, but also to other terms that affect prices to purchasers, such as credit terms, shipping fees, warranties, discount programs, or financing rates. An increase in consumer demand can also cause uniformly higher prices for a product in limited supply. If a drought causes the supply of wheat to decline, the price paid to all affected farmers will likely increase. For example, prices of commodities such as wheat are often identical because the products are virtually identical, and the prices that farmers charge all rise and fall together without any agreement among them. On the contrary, they often result from normal market conditions. ![]() Not all price similarities, or price changes that occur at the same time, are the result of agreements among competitors. ![]() Invitations to coordinate prices also can raise concerns, as when one competitor announces publicly that it is willing to end a price war or raise prices if its rival is willing to do the same. For example, if direct competitors have a pattern of unexplained identical contract terms or price behavior together with other factors (such as the lack of legitimate, independent business explanation), unlawful price fixing may be the reason. Price-fixing schemes are often worked out in secret and can be hard to uncover, but an agreement can be discovered from "circumstantial" evidence. Illegal price fixing occurs whenever two or more competitors agree to take actions to raise, lower, maintain, or stabilize the price of any product or service. Where appropriate, the FTC may also bring a civil enforcement action.Ī naked agreement among competitors to fix prices is almost always illegal, whether prices are specified at a minimum, maximum, or within some range. Potential penalties include lengthy terms of imprisonment (up to ten years) and large fines (up to $1 million for individuals, $100 million for companies, or twice the gain or loss from the offense). Individuals and companies that knowingly enter price-fixing agreements are routinely investigated by the FBI and other federal law enforcement agencies and can be criminally prosecuted. Price fixing is a major concern of government antitrust enforcement. Price fixing also includes agreements among competing purchasers or competing employers about the prices or wages they will pay. When competitors agree to restrict competition, the result is often higher prices. When purchasers make choices about what products and services to buy, they expect that the price has been determined on the basis of supply and demand, not by an agreement among competitors. Generally, the antitrust laws require that each company establish prices and other competitive terms on its own, without agreeing with a competitor. Price fixing is an agreement (written, verbal, or inferred from conduct) among competitors to raise, lower, maintain, or stabilize prices or price levels. About the FTC Show/hide About the FTC menu items.News and Events Show/hide News and Events menu items.Advice and Guidance Show/hide Advice and Guidance menu items.Competition and Consumer Protection Guidance Documents.Enforcement Show/hide Enforcement menu items.
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