Price fixing

[Super Jock]

http://news.bbc.co.uk/1/hi/business/7369838.stm

I'm perhaps being silly, by price fixing - what actually are the supermarkets doing that's illegal?

[Thalia]

Price fixing would involve the supermarkets agreeing on a minimum price for a product and having neither sell below it. This would be an attempt to maintain expensive prices at the customer's expense since the minimum price would be above what the supermarkerts are actually able to sell it at.


Or at least that's why i understand by price fixing anyway


[hr]

You've been nothing but an angel every day of your life and now you wonder what it's like to be damned...

[bdw]

Formally, they are argued to be in breach of s.2(1) of Chapter I of the Competition Act 1998, the statute that was intended to align the UK's competition and restrictive practices legislation with its EU equivalent.

The concept underpinning the legislation is that restrictive practices (price fixing, market allocation) by more than one company (Chapter I) or abuse of a dominant position within the market, as may be defined, by a single company (Chapter II) may have a detrimental effect on competition in such market and thereby also on the consumer (though some might argue that this is an unnecessary fettering of the mechanics of the free market). See also the recent claim that anti-competitive practices are endemic in the UK construction industry or the Virgin/BA whistle-blowing affair. The forced divestment by Microsoft of certain of its businesses is an example of the penalties under the Chapter II equivalent under US anti-trust legislation.

Practically though, the Competition Act has been a massive disappointment. In a formal sense, it has teeth (dawn raid powers and sanctions including financial penalties of up to 10% of worldwide revenues of the responsible company and prison terms). These significant penalties were supposed to encourage good behaviour among companies. However the number of successful, prominent prosecutions under the Act has been pretty paltry.

The difficulty is that, for a successful Chapter I prosecution, one must have either a credible whistle-blower or records demonstrating the alleged behaviour (again, see Virgin/BA). For obvious reasons, companies will rarely put discussions on price fixing in writing. Meanwhile, Chapter II prosecutions are characterised by endless legal arguments over the extent of the market in which the behaviour took place. The rationale is that the larger the market can be drawn, the less likely the defendant company can be proved to have been in a dominant position (and thus unable to have abused such dominant position).

[Bonnie]

Also see Sotheby's and Christie's famous case-- they wrote about it in their journals!
Note to self: if you're going to fix prices and/or enact in other crimes, don't detail the plans in your journal, write down the date, times and location you met with the competitor in your journal, or keep a damn journal at all.