Price fixing

Price fixing in the commodity markets
Restrictive price regulation
Fare fixing
Price rigging

Nature

Price fixing is an illegal and unethical practice where competing businesses agree to set prices at a certain level, rather than allowing market forces to determine them. This collusion undermines competition, leading to artificially high prices, reduced consumer choice, and market inefficiency. Price fixing is considered a serious problem because it harms consumers, distorts fair trade, and violates antitrust laws in many countries. Authorities actively investigate and penalize companies involved in such schemes to protect market integrity and ensure fair pricing. Notable cases have occurred in industries such as airlines, pharmaceuticals, and electronics.

Background

Price fixing emerged as a significant global concern in the late 19th and early 20th centuries, as industrialization and international trade exposed widespread collusion among firms to manipulate market prices. Landmark antitrust cases, such as the U.S. Sherman Act prosecutions and the European Commission’s cartel investigations, heightened awareness of its economic and social harms. Over time, coordinated enforcement efforts and high-profile scandals have underscored price fixing’s persistent threat to fair competition worldwide.

Incidence

In 1990, the USA Justice Department was investigating an incidence of covert price fixing in the airline industry. It seemed that certain airlines may signal fare increases to each other through the computer network of the industry's clearing house for fares. Through a process of hidden electronic negotiation, this would allow participating carriers to adjust their prices in concert so that the consumer had little chance of receiving competitive prices from different airlines for the same leg.

Price rigging is one of the principal ways in which foreign firms are excluded from Japan. This is supported by the preferential buying habits of Japan's many keiretsu families of companies, which are linked by a web of cross-shareholdings that can set the margins all the way from the factory to the shopkeeper's shelf and keep Japanese prices as much as 60% higher in Japan than in America.

In 1994 the European Union fined 16 European steelmakers a total of $117 million for flagrant violation of rules on price fixing and share markets for steel beams.

Claim

Price fixing is a serious and deeply harmful problem that undermines the very foundation of fair markets. It robs consumers of choice, inflates prices, and stifles innovation. When companies collude to fix prices, they betray public trust and exploit hardworking people. This unethical practice must be confronted and eradicated with strict enforcement and severe penalties. Allowing price fixing to persist threatens economic justice and the integrity of our entire marketplace.

Counter-claim

Price fixing is just another way of using futures markets. The dealer may agree to buy a certain quantity of a commodity of a specified quality at a given date, the price to be based on a futures market quotation (plus or minus an agreed amount) for a specified delivery contract at a date chosen by the buyer within a fixed period.