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The US free-market system has long been protected by laws and government regulations to prevent monopolization and protect consumers from illegal activity. Price fixing is a scheme where competitor companies band together to ensure that a product or service always costs roughly the same and buyers have no other choices. This quashes competition and inhibits the free-market system.
Price fixing occurs when competitors agree, either implied or expressed, to coordinate their pricing and avoid competing. This creates a monopoly or cartel that attempts to control the market rather than allowing free trade. They may raise, lower, maintain, or stabilize prices or pricing levels. This can include wages as well as prices of products.
It is an illegal and anticompetitive activity that controls prices and artificially suppresses competition. This can stifle the market, especially if the companies charge more than their products are worth. These companies dominate the market and prevent buyers from finding a better price. Consumers are then forced to purchase only from the cartel with no other options and could be defrauded.
Horizontal price fixing is when a group of market competitors works together to sell products and avoid competing. This can take the form of all companies selling a product at a set price or applying the same terms, such as not allowing free shipping on a specific product or type of product.
Vertical price fixing occurs at the supply chain level, such as a manufacturer’s agreement with a retail outlet to sell a product at a specific price. Another example is an agreement between two entities to limit the availability and numbers of a product to keep the price artificially high.
For instance, book publishers print a set price on each book they publish but cannot compel a retailer to sell at the published price. Publishers can legally refuse to sell their books to a specific retailer, but this doesn’t necessarily qualify as price fixing.
Two federal statutes address price fixing:
The Sherman Antitrust Act prohibits any conspiracy activity to inhibit free trade. This can take the form of agreements that fix prices, and wages, rig, or impact bids, or allocate markets, customers, or workers, or exclusive contracts intended to reduce competition. Any type of activity intended to monopolize a market for a product or service and suppress competition by engaging in anticompetitive conduct falls under the Sherman Act. This can be prosecuted either civilly or criminally.
The Clayton Act is intended to prevent unfair business practices that limit consumer choice and inhibit competition. It requires businesses to engage in fair business practices that prevent a competitive marketplace. Specific to The Clayton Act are:
These also help protect small businesses from unfair treatment by larger companies.
Both laws are intended to encourage the free market and keep them competitive, as well as help keep the labor market fair for workers.
It may or may not be intentional. Pricing for goods and services is largely based on market factors, such as raw materials pricing, shipping costs, or availability. For instance, in early 2023, shortages, higher demand, and other factors led to a fast and drastic increase in the price of eggs nationwide. When the temporary shortage eased, prices dropped back to more normal levels.
When competitors all seem to have the same price for something or change their prices at the same time, this can lead to allegations of price fixing. Similarly, when companies limit their production or capacity or use comparable formulas for their pricing, questions may arise that can lead to an investigation.
In the Gulf South, especially here in Florida, price gouging is also a concern after a major disaster like a hurricane. Significantly raising prices on commodities such as gasoline, milk, and other products in the aftermath can lead to complaints about businesses.
Companies found to engage in price fixing in violation of the Sherman Act face fines of as much as $100 million. Individuals can face fines of as much as $1 million and may include as much as 10 years behind bars.
Court-ordered compliance, injunctions, and private lawsuits with civil damages may also follow, along with damage to the company’s branding and reputation.
Price fixing and other antitrust allegations are federal-level white-collar offenses. Contact the attorneys at Farkas & Crowley immediately if you or your company are facing these allegations.
The Federal Trade Commission (FTC) handles civil enforcement actions, whereas the Department of Justice (DOJ) handles criminal enforcement actions.
Price fixing is very complicated, and requires expert legal help. The sooner you obtain legal help with your case, the better. The attorneys at Farkas & Crowley Work are experienced in federal cases and can help defend your company against price-fixing allegations and other antitrust matters.
If you or your company have been charged with price fixing or other federal charges, contact the criminal defense attorney team at Farkas & Crowley immediately for a free case evaluation.
Looking for a criminal law firm? Farkas & Crowley, P.A. are the attorneys for you. They are extremely knowledgeable of the law and go the extra mile for their clients. Their expertise and impeccable work ethic are hard to beat. Available 24/7. Highly recommended.
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West Palm Beach, FL 33401
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The information on this website is for general information purposes only. Nothing on this site should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute an attorney-client relationship. No content on this site may be reused in any fashion without written permission from criminal defense attorneys at Law Office of Farkas & Crowley, P.A.
The information on this website is for general information purposes only. Nothing on this site should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute, an attorney-client relationship. No content on this site may be reused in any fashion without written permission from criminal defense attorneys at Law Office of Farkas & Crowley, P.A.
