Competition law
Basic concepts
History of competition law Monopolization Coercive monopoly Natural monopoly Barriers to entry Market power SSNIP test Relevant market Merger control
Anti-competitive practices
Collusion Formation of cartels Price fixing Product bundling and tying Refusal to deal Group boycott Exclusive dealing Bid rigging Dividing territories Conscious parallelism Predatory pricing Misuse of patents and copyrights
Laws and doctrines
United States Sherman Antitrust Act Clayton Antitrust Act Robinson-Patman Act Federal Trade Commission Act Merger guidelines Essential facilities doctrine Noerr-Pennington doctrine Rule of reason Europe European Community competition law Irish Competition Law Competition Act 1998 (U. Competition law history refers to attempts by governments to regulate Competitive markets for goods and services leading up to the modern competition or Antitrust The term "monopolization" refers to an offense under Section 2 of the American Sherman Antitrust Act, passed in 1890 In Economics and Business ethics, a coercive monopoly is a business concern that prohibits competitors from entering the field with the natural result being that Natural monopoly is a term used in Economics to refer to two different things In Economics and especially in the theory of Competition, barriers to entry are obstacles in the path of a firm which wants to enter a given Market In Economics, market power is the ability of a firm to alter the Market price of a good or service In Competition law, before deciding whether companies have significant Market power which would justify government intervention the test of Small but Significant and Non-transitory In Competition law the Relevant market defines the market in which one or more goods compete Merger control refers to the procedure of reviewing Mergers and acquisitions under Antitrust / competition law Anti-competitive practices are Business or Government practices that prevent and/or reduce Competition in a Market (see Restraint of trade A cartel is a formal (explicit agreement among firms Cartels usually occur in an oligopolistic industry, where there is a small number of sellers and usually involve Price fixing is an agreement between business competitors to sell the same product or service at the same price Product bundling is a Marketing strategy that involves offering several products for sale as one combined product Tying is the practice of making the sale of one good (the tying good to the De facto or De jure customer conditional on the purchase of a second distinctive Refusal to deal is one of several Anti-competitive practices forbidden in countries which have Free market economies In Competition law, a group boycott is a type of Secondary boycott in which two or more competitors in a Relevant market refuse to conduct business Exclusive dealing refers to when a retailer or wholesaler is ‘tied’ to purchase from a supplier on the understanding that no other distributor will be appointed or receive supplies Bid rigging is an illegal agreement between two or more competitors Dividing territories (also Market division) is an agreement by two companies to stay out of each other's way and reduce competition in the agreed-upon territories Conscious parallelism is a term used in Competition law to describe Price-fixing between competitors in an Oligopoly that occurs without an actual spoken Predatory pricing (also known as destroyer pricing) is the practice of a firm selling a product at very low price with the intent of driving competitors out of the Market In United States patent law, patent misuse is an Affirmative defense used in patent litigation when a Defendant has been accused to have Copyright misuse is an equitable defense against Copyright infringement in the United States based on the unreasonable conduct of United States antitrust law is the body of Laws that prohibits anti-competitive behavior (monopoly and Unfair business practices. The Sherman Antitrust Act ( Sherman Act, July 2, 1890, ch 647,) was the first United States Federal statute to limit Cartels and The Clayton Antitrust Act of 1914 ( October 15[[ 914]] ch 323, codified at,) was enacted in the United States to add further substance to the U The Robinson-Patman Act of 1936 (or Anti-Justice League Discrimination Act,) is a United States federal law that prohibits what were considered at the time of passage The Federal Trade Commission Act of 1914 (15 USC §§ 41-58 as amended) established the Federal Trade Commission (FTC a Bipartisan body of five members The Merger guidelines are a set of internal rules promulgated by the Antitrust Division of the United States Department of Justice (USDOJ in conjunction with the The essential facilities doctrine (sometimes also referred to as the essential facility doctrine) is a Legal doctrine which describes a particular type of claim of The Noerr-Pennington doctrine is a doctrine of United States Antitrust law set forth by the United States Supreme Court in a pair of cases which The rule of reason is a doctrine developed by the United States Supreme Court in its interpretation of the Sherman Antitrust Act. European Community competition law is one of the areas of authority of the European Union. Irish Competition Law is the Irish body of legal rules designed to ensure fairness and freedom in the Marketplace. The Competition Act 1998 is the current major source of competition policy in the UK along with Enterprise Act 2002. K. ) Australia Trade Practices Act 1974
Enforcement authorities and organizations
International Competition Network List of competition regulators
edit box

Collusion is an agreement, usually secretive, which occurs between two or more persons to deceive, mislead, or defraud others of legal rights, or to obtain an objective forbidden by law typically involving fraud or gaining an unfair advantage and can involve "wage fixing, kickbacks, or misrepresenting the independence of the relationship between the colluding parties. The Trade Practices Act 1974 is an act of the Parliament of Australia. The International Competition Network is an informal virtual network that seeks to facilitate cooperation between Competition law authorities globally A competition regulator is a Government agency, typically a statutory authority, sometimes called an economic regulator, which regulates and enforces "^[1] All acts affected by collusion are considered void. In Law, void means of no legal effect The Latin phrase void ab initio means "to be treated as invalid from the outset" ^[2]

Contents 1 Definition 2 Variations 3 Characteristics 4 Examples 5 Barriers 6 See also 7 References 8 Other

Definition

In the study of economics and market competition, collusion takes place within an industry when rival companies cooperate for their mutual benefit. Economics is the social science that studies the production distribution, and consumption of goods and services. Competition is a rivalry between individuals groups nations or animals for territory or resources For other uses of this term see Industry (disambiguation An industry (from Latin industrius, "diligent industrious" Collusion most often takes place within the market form of oligopoly, where the decision of a few firms to collude can significantly impact the market as a whole. In Economics, market structure (also known as market form) describes the state of a Market with respect to competition An oligopoly is a Market form in which a Market or Industry is dominated by a small number of sellers (oligopolists Cartels are a special case of explicit collusion. A cartel is a formal (explicit agreement among firms Cartels usually occur in an oligopolistic industry, where there is a small number of sellers and usually involve Collusion which is not overt, on the other hand, is known as tacit collusion. Tacit Collusion occurs when Cartels are illegal or overt collusion is absent

Variations

According to neoclassical price-determination theory and game theory, the independence of suppliers forces prices to their minimum, increasing efficiency and decreasing the price determining ability of each individual firm. Neoclassical economics is a term variously used for approaches to Economics focusing on the determination of prices outputs and income distributions in markets Game theory is a branch of Applied mathematics that is used in the Social sciences (most notably Economics) Biology, Engineering, In Physics, a force is whatever can cause an object with Mass to Accelerate. Economic efficiency is used to refer to a number of related concepts If firms collude to increase prices as a cooperative, however, loss of sales is minimized as consumers lack alternative choices at lower prices. This benefits the colluding firms at the cost of efficiency to society. Economic efficiency is used to refer to a number of related concepts

One variation of this traditional theory is the theory of kinked demand. The kinked demand curve theory is an economic theory regarding Oligopoly and Monopolistic competition. Firms face a kinked demand curve if, when one firm decreases its price, other firms will follow suit in order to maintain sales, and when one firm increases its price, its rivals are unlikely to follow, as they would lose the sales' gains that they would otherwise get by holding prices at the previous level. Kinked demand potentially fosters supra-competitive prices because any one firm would receive a reduced benefit from cutting price, as opposed to the benefits accruing under neoclassical theory and certain game theoretic models such as Bertrand competition. Bertrand competition is a model of Competition used in Economics, named after Joseph Louis François Bertrand (1822-1900

Characteristics

Practices that facilitate tacit collusion include:

• Uniform prices
• A penalty for price discounts
• Advance notice of price changes
• Information exchange

Examples

Collusion is largely illegal in the United States, Canada and most of the EU due to antitrust law, but implicit collusion in the form of price leadership and tacit understandings still takes place. Price fixing is an agreement between business competitors to sell the same product or service at the same price The United States of America —commonly referred to as the Country to "Dominion of Canada" or "Canadian Federation" or anything else please read the Talk Page The European Union ( EU) is a political and economic union of twenty-seven member states, located primarily in Several examples of collusion in the United States include:

• Andrew Malyi and market division among manufacturers of heavy electrical equipment in the 1960s. The 1960s decade refers to the years from the beginning of 1960 to the end of 1969
• An attempt by Major League Baseball owners to restrict players' salaries in the mid-1980s. Baseball collusion refers to baseball owners working together to avoid competitive bidding for player services or player jointly negotiating with team owners The 1980s was the decade spanning from January 1 1980 to December 31 1989.
• Price fixing within food manufacturers providing cafeteria food to schools and the military in 1993. Food is any substance usually composed primarily of Carbohydrates Fats water and/or Proteins that can be eaten or drunk by an A school (from Greek σχολεῖον - scholeion) is an Institution designed to allow and encourage Students (or "pupils" A military is an Organization authorized by its Nation to use force usually including use of Weapons in defending its Country (or by attacking Year 1993 ( MCMXCIII) was a Common year starting on Friday (link will display full 1993 Gregorian calendar)
• Market division and output determination of livestock feed additive by companies in the US, Japan and South Korea in 1996. Livestock is the term used to refer (singularly or plurally to a Domesticated Animal intentionally reared in an agricultural setting to produce such as Food For a topic outline on this subject see List of basic Japan topics. South Korea, officially the Republic of Korea and often referred to as Korea ( Korean: 대한민국 tɛː Year 1996 ( MCMXCVI) was a Leap year starting on Monday (link will display full 1996 Gregorian calendar)

There are many ways that implicit collusion tends to develop:

• The practice of stock analyst conference calls and meetings of industry almost necessarily cause tremendous amounts of strategic and price transparency. This allows each firm to see how and why every other firm is pricing their products.
• If the practice of the industry causes more complicated pricing, which is hard for the consumer to understand (such as risk-based pricing, hidden taxes and fees in the wireless industry, negotiable pricing), this can cause competition based on price to be meaningless (because it would be too complicated to explain to the customer in a short advert). Risk-based pricing is a methodology adopted by many lenders in the mortgage and Financial services industries This causes industries to have essentially the same prices and compete on advertising and image, something theoretically as damaging to a consumer as normal price fixing.

Barriers

There are significant barriers to collusion, however, under most circumstances. These include:

• The number of firms: as the number of firms in an industry increases, it is more difficult to successfully organize and communicate. For other uses of this term see Industry (disambiguation An industry (from Latin industrius, "diligent industrious"
• Cost and demand differences between firms: if costs vary significantly between firms, it may be impossible to establish a price at which to fix output.
• Cheating: there is considerable incentive to cheat on collusion agreements; though lowering prices might trigger price wars, in the short term the defecting firm may gain considerably. Price war is a term used in Business to indicate a state of intense competitive rivalry accompanied by a multi-lateral series of price reductions
• Potential entry: new firms may enter the industry, establishing a new baseline price and eliminating collusion (though anti-dumping laws and tariffs can prevent foreign companies entering the market).
• Economic recession: an increase in average total cost or a decrease in revenue provides incentive to compete with rival firms in order to secure a larger market share and increased demand.

See also

• Collusive lawsuit

References

1. ^ Collusion Law & Legal Definition [1]
2. ^ Collusion[2]

• Vives, X. A collusive lawsuit (sometimes referred to as a collusive action) is a Lawsuit in which the parties to the suit have no actual quarrel with one another but one sues (1999) Oligopoly pricing, MIT Press, Cambridge MA (readable; suitable for advanced undergraduates. )
• Tirole, J. (1988) The Theory of Industrial Organization, MIT Press, Cambridge MA (An organized introduction to industrial organization)
• Tirole, J. (1986), "Hierarchies and Bureaucracies", Journal of Law Economics and Organization, vol. Jean Marcel Tirole (Aug 9 1953 -) is a French professor of Economics. Jean Marcel Tirole (Aug 9 1953 -) is a French professor of Economics. 2, pp. 181-214.
• Tirole, J. (1992), "Collusion and the Theory of Organizations", Advances in Economic Theory: Proceedings of the Sixth World Congress of the Econometric Society, ed by J. Jean Marcel Tirole (Aug 9 1953 -) is a French professor of Economics. -J. Laffont. Cambridge: Cambridge University Press, vol. 2:151-206.

Other

• Collusion Syndicate - an Austin, Texas based computer hacker organization. The COLLUSION SYNDICATE, formerly the Collusion Group, was a Computer Security and Internet Politics Special Interest Group (SIG founded in 1995 and effectively

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