Which Of The Following Are Agreements To Fix Prices

International price agreements by private companies can be followed under antitrust law in many countries. Examples of international cartels prosecuted are those that controlled the prices and production of lysine, citric acid, graphite electrodes and mass vitamins. [2] For example, the Organization of the Petroleum Exporting Countries (OPEC) is infamous for setting oil production volumes to keep oil prices high. British competition law prohibits almost any attempt to fix prices. [17] Economists generally agree that horizontal price agreements are bad for consumers. Competition generally lowers prices as competitors seek to attract each other to customers. That is why, in a competitive market, the consumer recognizes the greatest excess of consumption – the value of the good to the consumer, which goes beyond what the consumer has to pay. reduce price agreements by reducing competitors` ability to react freely and quickly to each other`s prices, to reduce consumer surpluses by affecting the competitive market`s ability to keep prices low. More importantly, horizontal agreements between competitors facilitate the joint acquisition of market power – the ability to maintain higher prices than allows free competition without losing customers. A comprehensive agreement could allow competitors to act de facto in a monopolistic manner, raise prices and reduce production at the expense of consumer well-being. In addition, they could do so without taking advantage of the efficiencies of a merger or actual consolidation.

The Authority has imposed fines of 93 million euros on an agreement in the ham and sausage sector – The producers concerned (« cold meat producers ») have worked together to buy slices of ham in slaughterhouses at lower prices and/or to increase the prices of (…) There are, however, some criticisms of a horizontal pricing ban. Some conservative economists argue that horizontal price agreements are not worth considering because they are economically unstable. Each member of a horizontal price agreement has a strong incentive to correct an error, as it secretly offers lower prices to attract a larger proportion of customers. In addition, each market with excessive prices, induced by a horizontal agreement, will quickly attract new entrants and can easily bring prices down to competitive levels. Finally, many economists are skeptical of the ability of courts and prosecutors to distinguish between real price agreements and other complex agreements for legitimate purposes of promoting competition. One of the legitimate business reasons why a company can adjust its prices to a competitor is the reaction to clearly visible prices displayed by competitors (for example. B of gas price plates) or by competitors who quickly adjust their prices to price fluctuations (« parallel prices »).