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Antitrust Enforcement and the Consumer
Many consumers have never heard of antitrust laws, but when these laws are effectively and responsibly enforced, they can save consumers millions and even billions of dollars a year in illegal overcharges. Most States have antitrust laws, and so does the Federal Government. Essentially, these laws prohibit business practices that unreasonably deprive consumers of the benefits of competition, U.S. Department of Justice resulting in higher prices for inferior Washington, DC 20530 products and services. This pamphlet was prepared to alert consumers to the existence and importance of antitrust laws and to explain what you can do for antitrust enforcement and for yourself. 1. What Do the Antitrust Laws Do for the Consumer? Antitrust Antitrust laws protect competition. Free and open competition benefits consumers Enforcement by ensuring lower prices and new and better products. In a freely competitive and the market, each competing business generally Consumer will try to attract consumers by cutting its prices and increasing the quality of its products or services. Competition and the profit opportunities it brings also stimulate businesses to find new, innovative, and more efficient methods of production. Consumers benefit from competition through lower prices and better products and services. Companies that fail to understand or react to consumer needs may soon find themselves losing out in the competitive battle. When competitors agree to fix prices, rig bids, or allocate (divide up) customers, consumers lose the benefits of competition. The prices that result when competitors agree in these ways are artificially high; such prices do not accurately reflect cost and therefore distort the allocation of society’s resources. -
The Three Types of Collusion: Fixing Prices, Rivals, and Rules Robert H
University of Baltimore Law ScholarWorks@University of Baltimore School of Law All Faculty Scholarship Faculty Scholarship 2000 The Three Types of Collusion: Fixing Prices, Rivals, and Rules Robert H. Lande University of Baltimore School of Law, [email protected] Howard P. Marvel Ohio State University, [email protected] Follow this and additional works at: http://scholarworks.law.ubalt.edu/all_fac Part of the Antitrust and Trade Regulation Commons, and the Law and Economics Commons Recommended Citation The Three Types of Collusion: Fixing Prices, Rivals, and Rules, 2000 Wis. L. Rev. 941 (2000) This Article is brought to you for free and open access by the Faculty Scholarship at ScholarWorks@University of Baltimore School of Law. It has been accepted for inclusion in All Faculty Scholarship by an authorized administrator of ScholarWorks@University of Baltimore School of Law. For more information, please contact [email protected]. ARTICLES THE THREE TYPES OF COLLUSION: FIXING PRICES, RIVALS, AND RULES ROBERTH. LANDE * & HOWARDP. MARVEL** Antitrust law has long held collusion to be paramount among the offenses that it is charged with prohibiting. The reason for this prohibition is simple----collusion typically leads to monopoly-like outcomes, including monopoly profits that are shared by the colluding parties. Most collusion cases can be classified into two established general categories.) Classic, or "Type I" collusion involves collective action to raise price directly? Firms can also collude to disadvantage rivals in a manner that causes the rivals' output to diminish or causes their behavior to become chastened. This "Type 11" collusion in turn allows the colluding firms to raise prices.3 Many important collusion cases, however, do not fit into either of these categories. -
Monopoly Pricing in a Time of Shortage James I
Loyola University Chicago Law Journal Volume 33 Article 6 Issue 4 Summer 2002 2002 Monopoly Pricing in a Time of Shortage James I. Serota Vinson & Elkins L.L.P. Follow this and additional works at: http://lawecommons.luc.edu/luclj Part of the Law Commons Recommended Citation James I. Serota, Monopoly Pricing in a Time of Shortage, 33 Loy. U. Chi. L. J. 791 (2002). Available at: http://lawecommons.luc.edu/luclj/vol33/iss4/6 This Article is brought to you for free and open access by LAW eCommons. It has been accepted for inclusion in Loyola University Chicago Law Journal by an authorized administrator of LAW eCommons. For more information, please contact [email protected]. Monopoly Pricing in a Time of Shortage James L Serota* I. INTRODUCTION Traditionally, the electric power industry has been heavily regulated at both the federal and state levels. Recently, the industry has been evolving towards increasing emphasis on market competition and less pervasive regulation. Much of the initial impetus for change has occurred during periods of reduced demand and increased supply. More recently, increases in demand and supply shortages have led to brownouts, rolling blackouts, price spikes and accusations of "price gouging."' The purpose of this paper is to examine the underlying economic and legal bases for regulation and antitrust actions, and the antitrust ground rules for assessing liability for "monopoly pricing in times of shortage." In this author's view, price changes in response to demand are the normal reaction of a competitive market, and efforts to limit price changes in the name of "price gouging" represent an effort to return to pervasive regulation of electricity. -
Federal Trade Commission Volume Decision
FEDERAL TRADE COMMISSION DECISIONS Findings, Opinions and Orders IN THE MATTER OF RUSSELL STOVER CANDIES, INC. FINAL ORDER, OPINION, ETC. , IN REGARD TO ALLEGED VIOLATION OF SEC. 5 OF THE FEDERAL TRADE COMMISSION ACT Docket 9140. Complaint, July 1980-Final Order, July , 1982 This order requires a Kansas City, Mo. manufacturer, seller and distributor of candy products to cease, among other things, entering into, maintaining, or enforcing any ageement, understanding or arrangement to fix resale prices for its products; suggesting resale prices, by any means, without clearly stating that they are merely suggested; and seeking information relating to recalcitrant retailers. The respondent is prohibited from terminating, sus pending or taking any other adverse action against retailers who fail to conform to company s suggested prices; and required to reinstate those retailers who had been terminated for non-conformance to designated prices. The order additionally requires respondent to pay for a survey to ascertain what percentage of its products is sold at manufacturer-designated prices, and to cease suggesting resale prices if that percentae exceeds 87. 4%. Appearances For the Commission: Eugene Kaplan, Jayma M. Meyer and Warren Josephson. For the respondent: Lawrence R. Brown and David Everson, Stinson, Mag Fizzell Kansas City, Mo. and Tom Franklin, in- house counsel, Kansas City, Mo. COMPLAINT Pursuant to the provisions of the Federal Trade Commission Act as amended, and by virtue of the authority vested in it by said Act the Federal Trade Commission, having reason to believe that Russell Stover Candies, Inc. , a corporation, hereinafter referred to as respondent, has violated the provisions of said Act, and it appearing to the Commission that a proceeding by it in respect thereof would be in the public interest, hereby issues its complaint stating its charges in that respect as follows: FEDERAL TRADE COMMISSION DECISIONS Initial Decision 100 F. -
Regulation Methods in Natural Monopoly Markets Case of Russian Gas Network Companies
International Journal of Engineering Research and Technology. ISSN 0974-3154, Volume 12, Number 5 (2019), pp. 624-630 © International Research Publication House. http://www.irphouse.com Regulation Methods in Natural Monopoly Markets Case of Russian Gas Network Companies Filatova Irina1, Shabalov Mikhail2 and Nikolaichuk Liubov3 Department of Economics, Accounting and Finance, Saint Petersburg Mining University, Russian Federation. 1ORCIDs: 0000-0002-0505-8274, 20000-0003-2224-6530, 30000-0001-5013-1787 Abstract difficult to predict and regulate. It is worth noting that the state in the gas distribution industry acts simultaneously as The main stakeholders in the gas distribution sector two stakeholders: the first reflects its interests as an authority (government, shareholders and consumers) have different regulating the functioning and development of the industry; interests and goals. The state, as a regulatory body, should and the second one represents the interests of the state as the find the best regulatory methods in order to achieve the main shareholder of gas companies. maximum effect of public welfare: direct (pricing) and indirect (price influencing). The use of the “costs plus” A key tool designed to ensure a balance of interests of the method makes it possible to set the lowest possible tariffs for above parties is the policy of state price regulation, the goal of the transportation of natural gas, but it leads to the emergence which is to prevent market failures in order to maintain and of a “tariff precedent”, a loss of profits for companies, limited strengthen public welfare [2, 3]. At the same time, the need investment in the development of the sector. -
"Application of Part IV of the Trade Practices Act to Local Government"
"Application of Part IV of the Trade Practices Act to Local Government" Michael Cosgrave Regional Director - Melbourne Application of National Competition Policy to Local Government Seminar 30 July 1996 Introduction As you are no doubt all aware, from 21 July 1996 the Trade Practices Act 1974 ("the Act") was further extended under National Competition Policy. All States except Western Australia have enacted legislation conforming with the Competition Policy Reform Act, thus extending the ambit of the Act to now include many previously exempt business activities of Australian Local Governments. The application of the Act is important for every one of you here today. A message that I want to impart to you today is that each local government is now going to be responsible for its the competition effects of its actions. The significance of the new coverage of the Act is that local governments now have to ensure that their legislation does not breach the Act and that its business organisations engage in fair trade practices. That said, the principles of the Act are nothing new for all local governments - many governments have been parties to contracts with corporations that are subject to the Act; furthermore, the provisions of the Act are basically common sense and basic fair trade principles. Claire Thomas this morning, and Professor Fels, the Chairman of the Commission, two months ago have discussed with you the position of Local Government under the NCP Reforms. Today I am going to go into more detail about Part IV of the Act, in particular, its application to Local Governments. -
Criminal Sanctions for Cartel Behaviour
CRIMINAL SANCTIONS FOR CARTEL BEHAVIOUR ANTHONY GRAY* I INTRODUCTION The Trade Practices Amendment (Cartel Conduct and Other Measures) Bill 2008 (Cth) controversially proposes the introduction of criminal sanctions for certain cartel behaviour. These measures were recommended by the Dawson Committee in its 2003 review, 1 and not surprisingly have the support of the Australian Competition and Consumer Commission (ACCC).2 In this article, I will introduce the proposed new rules, 3 before assessing whether cartel conduct should be criminalised, in terms of traditional conceptions of what behaviour should be considered to be criminal in nature, as well as the likely effectiveness of the new regime in terms of deterring cartel behaviour, and enforcing cartel provisions more generally. II OUTLINE OF PROPOSED NEW RULES Proposed new s 44ZZRF of the Trade Practices Act 1974 (Cth) will make it an offence for an individual4 to: (a) make a contract or arrangement, or arrive at an understanding,5 with the intention of dishonestly6 obtaining a benefit,7 where * BBus (Acc), LLB (Hons), LLM (QUT), PhD (UNSW), Associate Professor in the School of Law, University of Southern Queensland. Thanks to an anonymous referee for helpful comments on an earlier draft. 1 Review of the Competition Provisions of the Trade Practices Act 1974 (2003) (Dawson Review) Trade Practices Act Review <http://tpareview.treasury.gov.au/content/home.asp> at 8 November 2008; R Steinwall, ‘The Dawson Committee Review of the Competition Provisions of the Trade Practices Act’ (2003) 11 Competition and Consumer Law Journal 87. 2 Australian Competition and Consumer Commission, Submission to the Trade Practices Act Review (2002) Trade Practices Act Review <http://tpareview.treasury.gov.au/submissions.asp> at 8 November 2008. -
Price Fixing and Repeated Games
9781405176323_4_014.qxd 10/19/07 8:12 PM Page 323 14 Price Fixing and Repeated Games In February 2007, the European Union Competition Directorate imposed their largest-ever fines on companies found guilty of colluding to fix prices. Five elevator manufacturers were fined a total of a992 million (approximately $1.4 billion) for operating a cartel that con- trolled prices in Germany, Belgium, Luxembourg and the Netherlands. ThuysenKrupp received the heaviest fine, of more than a479 million since it was judged to be a “repeat offender” by the Commission. Otis was fined a225 million, Schindler a144 million, Kone a142 million, and Mitsubishi’s Dutch subsidiary a1.8 million.1 The elevator case came just one month after another case involving gas insulated switch- gear projects in which the Commission imposed fines totally a750 million on 11 companies for their parts in a price-fixing cartel. In this case, the largest fine of a396.5 million was imposed on Siemens, Germany. This case is particularly interesting because it was broken open largely as a result of the Commission’s leniency policy. Under that policy, the first firm in a conspiracy to confess and “fink” on its co-conspirators gets a much reduced penalty. In fact, the finking firm in the switch-gear case, ABB Switzerland, was granted full immu- nity and paid no penalties in return for its confession and provision of information to the authorities. That reflects a considerable savings from the a215 million it would otherwise have had to pay as a repeat offender. Action to curb the activities of cartels has been equally active in the United States.2 The Department of Justice has recently imposed a total of more than $732 million on companies operating a cartel to control the pricing of dynamic random access memory (DRAM). -
Monopsony Power in Health Care Markets: Must the Big Buyer Beware Hard Bargaining? Jack A
Loyola University Chicago Law Journal Volume 18 Article 4 Issue 3 Spring 1987 Health Care Law Symposium 1987 Monopsony Power in Health Care Markets: Must the Big Buyer Beware Hard Bargaining? Jack A. Rovner Partner, Kirland & Ellis, Chicago, IL Follow this and additional works at: http://lawecommons.luc.edu/luclj Part of the Medical Jurisprudence Commons Recommended Citation Jack A. Rovner, Monopsony Power in Health Care Markets: Must the Big Buyer Beware Hard Bargaining?, 18 Loy. U. Chi. L. J. 857 (1987). Available at: http://lawecommons.luc.edu/luclj/vol18/iss3/4 This Article is brought to you for free and open access by LAW eCommons. It has been accepted for inclusion in Loyola University Chicago Law Journal by an authorized administrator of LAW eCommons. For more information, please contact [email protected]. Monopsony Power in Health Care Markets: Must the Big Buyer Beware Hard Bargaining?* Jack A. Rovner** Increasingly, sellers of health care goods and providers of health care services invoke antitrust law to attack customers who refuse to pay as much or to buy in the same way as they had in the past.' * Copyright © 1987 by Jack A. Rovner. All rights reserved. ** Partner, Kirkland & Ellis, Chicago; B.A., Brandeis University, 1968; J.D., Bos- ton University, 1976. A preliminary draft of this article was presented at the National Health Lawyers Association Seminar, "Antitrust in the Health Care Field," January 28- 30, 1987. 1. Among the antitrust cases that have been brought by sellers of health care goods and providers of health care services against their customers are: (a) Pharmacists' attacks on insurer prepaid drug plans. -
Methods for Increasing Competition in Telecommunications Markets
Methods for Increasing Competition in Telecommunications Markets By Mark Jamison Public Utility Research Center University of Florida Gainesville, Florida March 2012 Contact Information: Dr. Mark Jamison, Director Public Utility Research Center PO Box 117142 205 Matherly Hall University of Florida Gainesville, FL 32611-7142 +1.352.392.6148 [email protected] The author would like to thank Dr. Janice Hauge for her helpful comments on this paper and Professor Suphat Suphachalasai for his recommendations on content. The author also would like to thank Thammasat University and the National Telecommunications Commission of Thailand for their generous financial support. All errors and omissions are the responsibility of the author. Abstract We examine the concepts of workable competition, barriers and conduct that limit the achievement of workable competition, and steps that sector regulators can take to address these obstacles. The concept of workable competition is an attempt to describe a market situation that does not fit the model of perfect competition, but that has enough features of perfect competition that government intervention is unnecessary and possibly even counterproductive. The first attempt to define workable competition focused on issues of product differentiation, the number and size-distribution of producers, restrictions on output, imperfection in the value chain, information, scale economies, and producer ability to change output. Most recently a simple set of metrics emerged, namely that there should be at least 5 reasonably comparable rivals, none of the firms should have more than a 40 percent market share, and entry by new competitors must be easy. Barriers to achieving workable competition can be divided into demand side market features, supply side market features, and firm conduct issues. -
A Structured Outline for the Analysis of Horizontal Agreements
A STRUCTURED OUTLINE FOR THE ANALYSIS OF HORIZONTAL AGREEMENTS by Thomas B. Leary* The antitrust principles applied to “horizontal” arrangements are difficult to summarize. The principles have evolved over an extended period of time and have been shaped by decisions that are often hard to reconcile. I do not claim that the structure outlined below is the only way to read cases or frame issues, but it is one that I believe is consistent with the most recent precedent and learning. I. Introduction An agreement between actual or potential competitors to restrain their rivalry in some respect is commonly called a “horizontal restraint.” This kind of agreement should be distinguished from so-called “vertical” restraints that govern the interface between supplier and customers (who may also be competitors in another capacity). The distinction is fundamental because horizontal and vertical restraints are analyzed in different ways.1 The most significant difference is that horizontal restraints are more likely to be deemed illegal per se and vertical restraints are more likely to be subject to the “rule of reason.” * Commissioner, Federal Trade Commission. This revision of a paper first presented a year ago has been prepared for distribution at The Conference Board 2004 Antitrust Conference (Mar. 3-4, 2004). I have benefitted from discussions with FTC Chairman Timothy Muris, General Counsel William Kovacic, and attorney advisors Thomas Klotz, Lisa Kopchik and Holly Vedova in the preparation of this outline, but it does not necessarily reflect their views or the views of anyone else in the Commission. 1 See, e.g., discussion in ABA SECTION OF ANTITRUST LAW, ANTITRUST LAW DEVELOPMENTS 79-82 (5th ed. -
When Does Buyer Power Become Monopsony Pricing?
Antitrust , Vol. 27, No. 1, Fall 2012. © 2012 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association. X+Y Company has a large percentage of purchases in the market; and X+Y Company has sufficient buyer When Does Buyer power to drive hard bargains and pay “low” prices to Power Become the farmers. X+Y Company’s downstream, sell-side market is nation - al, includes many competitors, and includes products Monopsony Pricing? beyond those made by X+Y Company. Competition is strong, and X+Y Company has a low market share and BY JOHN D. SHIVELY no ability to increase consumer prices or decrease qual - ity. Any harm from the price X+Y Company pays for inputs is felt directly by the farmers whose profits are HE STRUCTURE OF AGRICULTURAL depressed, but there is no increase in price, or decrease industries breeds monopsony claims, and conse - in quality, to consumers who ultimately buy X+Y quently, those industries are a major arena for Company’s product. conflicting schools of thought on monopsony pric - Ting. The 2 01 0 USDA-DOJ Agriculture Industry The key issue is how to determine whether X+Y Com - Work shops raised issues of buyer power and monopsony pany’s power to pay “low” prices to farmers is (1) buyer pricing by concentrated agribusiness to new prominence power that exists in all competitive markets 1 or (2) anticom - and encouraged the DOJ’s Antitrust Division to take more petitive monopsony power.