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In neo-classical economics, price fixing is inefficient. The anti-competitive agreement by producers to fix prices above the market price transfers some of the consumer surplus to those producers and also results in a deadweight loss. International price fixing by private entities can be prosecuted under the antitrust laws of many countries.
Cargolux admitted to making and giving effect to illegal price fixing understandings with each of Lufthansa, Air France and KLM that each of them would impose a fuel surcharge on cargo carried internationally by air across their networks, (except where local conditions in a particular port or in a particular geographic area prevented the ...
Dumping, also known as predatory pricing, is a commercial strategy for which a company sells a product at an aggressively low price in a competitive market at a loss.A company with large market share and the ability to temporarily sacrifice selling a product or service at below average cost can drive competitors out of the market, [1] after which the company would be free to raise prices for a ...
Predatory pricing is a commercial pricing strategy which involves the use of large scale undercutting to eliminate competition. This is where an industry dominant firm with sizable market power will deliberately reduce the prices of a product or service to loss-making levels to attract all consumers and create a monopoly. [1]
Anti-cartel enforcement is a key focus of competition law enforcement policy. In the United States the Antitrust Criminal Penalty Enhancement and Reform Act 2004 raised the maximum imprisonment term for price fixing from three to ten years, and the maximum fine from $10 million to $100 million. [21]
A vertical agreement is a term used in competition law to denote agreements between firms at different levels of a supply chain.For instance, a manufacturer of consumer electronics might have a vertical agreement with a retailer according to which the latter would promote their products in return for lower prices.
Price leadership is the form of a tacit collusion, whereby firms orient at the price set by a leader. [14] A price leader will then emerge and set the general industry price, with other firms following suit. For example, see the case of British Salt Limited and New Cheshire Salt Works Limited. [15]
In 1982 the U.S. Department of Justice Merger Guidelines introduced the SSNIP test as a new method for defining markets and for measuring market power directly. In the EU it was used for the first time in the Nestlé/Perrier case in 1992 and has been officially recognized by the European Commission in its "Commission's Notice for the Definition of the Relevant Market" in 1997.