Editing Price fixing (section)

{{Short description|Anticompetitive agreement to control prices}}
{{Distinguish|fixed price|price controls}}
{{Competition law}}
'''Price fixing''' is an [[Anti-competitive practices|anticompetitive]] agreement between participants on the same side in a market to buy or sell a [[product (business)|product]], service, or commodity only at a fixed price, or maintain the market conditions such that the price is maintained at a given level by controlling [[supply and demand]].

The intent of price fixing may be to push the price of a product as high as possible, generally leading to [[profit (economics)|profits]] for all sellers but may also have the goal to fix, peg, discount, or stabilize prices. The defining characteristic of price fixing is any agreement regarding price, whether expressed or implied.

Price fixing requires a conspiracy between sellers or buyers. The purpose is to coordinate pricing for mutual benefit of the traders. For example, manufacturers and retailers may conspire to sell at a common "retail" price; set a common minimum sales price, where sellers agree not to discount the sales price below the agreed-to minimum price; buy the product from a supplier at a specified maximum price; adhere to a [[price book]] or [[list price]]; engage in cooperative price [[advertising]]; standardize [[credit (finance)|financial credit]] terms offered to purchasers; use uniform [[discounts and allowances|trade-in allowances]]; limit [[discounts and allowances|discounts]]; discontinue a free service or fix the price of one component of an overall service; adhere uniformly to previously announced prices and terms of sale; establish uniform costs and [[markup (business)|markups]]; impose mandatory [[fee|surcharges]]; purposefully reduce output or sales in order to charge higher prices; or purposefully share or pool markets, territories, or customers.

Price fixing is [[competition law|permitted in some markets but not others]]; where allowed, it is often known as ''[[resale price maintenance]]'' or ''retail price maintenance''.

Not all similar prices or price changes at the same time are price fixing. These situations are often normal market phenomena. For example, the price of [[Agriculture|agricultural]] products such as wheat basically do not differ too much, because such agricultural products have no characteristics and are essentially the same, and their price will only change slightly at the same time. If a natural disaster occurs, the price of all affected wheat will rise at the same time. And the increase in consumer demand may also cause the prices of products with limited supply to rise at the same time.<ref>{{Cite web|title=Price Fixing|url=https://www.ftc.gov/advice-guidance/competition-guidance/guide-antitrust-laws/dealings-competitors/price-fixing|access-date=January 20, 2023|website=ftc.gov|publisher=[[Federal Trade Commission]]}}</ref>

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. Examples of prosecuted international cartels are those that controlled the prices and output of [[Lysine price-fixing conspiracy|lysine]], [[citric acid]], [[graphite electrodes]], and bulk [[Hoffmann-La Roche#Price-fixing conspiracy|vitamins]].<ref name="AAEA">{{cite report|url=https://ageconsearch.umn.edu/record/19499|title=Extraterritoriality of the Sherman Act and Deterrence of Private International Cartels|publisher=[[American Agricultural Economics Association]]|date=April 2004|access-date=September 30, 2014|last=Connor|first=John M.}}</ref>