Price Fixing Definition and Legal Meaning

On this page, you'll find the legal definition and meaning of Price Fixing, written in plain English, along with examples of how it is used.

What is Price Fixing?

n.A method in which businesses who are in competition with each other set up a strategy to fix up prices of particular commodities to avoid price competition.It is a criminal act according to federal laws as it encourages unfair competition and the public is deprived of reasonbale prices..This arrangement can also be made between suppliers and manufactures or distributors.

History and Meaning of Price Fixing

Price fixing is a prohibited practice under antitrust laws, it is the act of setting a price for a product or service, typically in agreement with competitors, resulting in higher prices rather than those set by market forces. Price fixing is considered an anticompetitive practice because it eliminates price competition, making it difficult for smaller companies to compete with larger, established players within the industry. This illegal practice has been prosecuted by governments since 1890 in the United States.

Examples of Price Fixing

Here are three examples of price fixing that have been prosecuted in recent history:

  • In 2019, two major dental supply companies agreed to pay a $3.3 million settlement to resolve allegations of conspiring to fix prices on dental equipment and supplies.
  • In 2018, a group of e-book publishers agreed to pay $68 million to settle antitrust allegations that they conspired to fix the prices of e-books sold to consumers.
  • In 2016, three South Korean oil refiners were fined $500 million for conspiring to fix petrol prices.

Legal Terms Similar to Price Fixing

  • Collusion: Collusion is an illegal practice whereby two or more parties conspire to deceive, mislead, or defraud others of legal rights or deprive them of their legal rights.
  • Bid rigging: Bid rigging is a form of collusion where bidders agree in advance who will be the winner of a bid process, ultimately inflating prices and excluding competition.
  • Market allocation: Market allocation refers to an anticompetitive practice in which competitors divide the market by customer, geography, or product to avoid competing with one another.