How to Take Legal Action Against Price Fixing
Look for common practices., Determine if a written agreement exists., Collect circumstantial evidence., Talk to company employees., Recognize the existence of normal market conditions.
Step-by-Step Guide
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Step 1: Look for common practices.
Price fixing occurs when two or more competitors enter an agreement to tamper with prices or terms and conditions of sale.
Price fixing can take place at any level where commodities or services are being offered.
For example, it would be considered price fixing if executives from Companies A, B, and C (all selling televisions) got together and agreed that no company should sell their televisions for less than $1,000.While one of the most common forms of price fixing is an agreement to raise the price of a good or service, other common forms of price fixing include:
Agreements to establish uniform price discounts Agreements to get rid of discounts for certain products or for certain consumers The creation of a formula that multiple competitors will use to set the price of a good or service Agreements about the terms and conditions of sale (e.g., freight charges and bulk discounts) Agreements to not advertise the price of a good or service -
Step 2: Determine if a written agreement exists.
When competitors enter into a written agreement to fix prices, it is almost always illegal.
A written agreement would usually take the form of a contract that would lay out exactly how the companies involved would change their actions in order to effect a price change.
However, written agreements to fix prices rarely exist.
Businesses know that price fixing is illegal so they will try to hide it.
If they create a written agreement, not only would it be unenforceable, but it would also create a paper trail that businesses do not want to exist. , In reality, price fixing takes place behind closed doors, in secret, through the use of verbal agreements and by conduct.
This makes it very difficult to uncover businesses that price fix.
However, the law recognizes this and allows you to use circumstantial evidence to build a case against price fixers.
Examples of useful circumstantial evidence would include:
Invitations to coordinate prices (e.g., one competitor asks another competitor to end a price war by stating what a reasonable price for their goods may be).
This information, while difficult to obtain, is most often gotten from employees working for one of the two or more companies involved in the price coordination.
This evidence usually pops up in whistleblower cases.
Patterns of unexplained identical contract terms or pricing behaviors between competitors (e.g., the price of gas at two neighboring stations is always the same).
Records of price changes.
Company memoranda discussing price analyses.
Recordings of competitor meetings or telephone calls. , In most cases of price fixing, state and federal investigations, as well as your private suit, will not go very far if you do not have the help of an employee working within one of the companies.This employee will need to be able to testify about what they saw while working and how it relates to price fixing.
If you think a company is taking part in a price fixing scheme, try reaching out to a trusted employee who might know about it.
However, reaching out to an employee can also be risky.
If the employee turns on you, they might tip off the company they work for.
If this happens, the company might cover their tracks and make it even more difficult for you to uncover some illegal action.
If you are an employee or some other insider, the United States will protect you if you come forward, as a whistleblower, with a claim of price fixing.
Under the False Claims Act, you will be able to remain anonymous while the government investigates your claim.If you think you should be afforded whistleblower protection, contact a lawyer before you file any complaints. , Not all similarities in pricing exist because of price fixing.
A lot of times, competitors will charge similar prices for their goods because it makes good business sense.
For example, the price of commodities (e.g., wheat) are often identical because the products are almost identical.
The price of those commodities rise and fall together based on market forces and not because of agreements among competitors. -
Step 3: Collect circumstantial evidence.
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Step 4: Talk to company employees.
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Step 5: Recognize the existence of normal market conditions.
Detailed Guide
Price fixing occurs when two or more competitors enter an agreement to tamper with prices or terms and conditions of sale.
Price fixing can take place at any level where commodities or services are being offered.
For example, it would be considered price fixing if executives from Companies A, B, and C (all selling televisions) got together and agreed that no company should sell their televisions for less than $1,000.While one of the most common forms of price fixing is an agreement to raise the price of a good or service, other common forms of price fixing include:
Agreements to establish uniform price discounts Agreements to get rid of discounts for certain products or for certain consumers The creation of a formula that multiple competitors will use to set the price of a good or service Agreements about the terms and conditions of sale (e.g., freight charges and bulk discounts) Agreements to not advertise the price of a good or service
When competitors enter into a written agreement to fix prices, it is almost always illegal.
A written agreement would usually take the form of a contract that would lay out exactly how the companies involved would change their actions in order to effect a price change.
However, written agreements to fix prices rarely exist.
Businesses know that price fixing is illegal so they will try to hide it.
If they create a written agreement, not only would it be unenforceable, but it would also create a paper trail that businesses do not want to exist. , In reality, price fixing takes place behind closed doors, in secret, through the use of verbal agreements and by conduct.
This makes it very difficult to uncover businesses that price fix.
However, the law recognizes this and allows you to use circumstantial evidence to build a case against price fixers.
Examples of useful circumstantial evidence would include:
Invitations to coordinate prices (e.g., one competitor asks another competitor to end a price war by stating what a reasonable price for their goods may be).
This information, while difficult to obtain, is most often gotten from employees working for one of the two or more companies involved in the price coordination.
This evidence usually pops up in whistleblower cases.
Patterns of unexplained identical contract terms or pricing behaviors between competitors (e.g., the price of gas at two neighboring stations is always the same).
Records of price changes.
Company memoranda discussing price analyses.
Recordings of competitor meetings or telephone calls. , In most cases of price fixing, state and federal investigations, as well as your private suit, will not go very far if you do not have the help of an employee working within one of the companies.This employee will need to be able to testify about what they saw while working and how it relates to price fixing.
If you think a company is taking part in a price fixing scheme, try reaching out to a trusted employee who might know about it.
However, reaching out to an employee can also be risky.
If the employee turns on you, they might tip off the company they work for.
If this happens, the company might cover their tracks and make it even more difficult for you to uncover some illegal action.
If you are an employee or some other insider, the United States will protect you if you come forward, as a whistleblower, with a claim of price fixing.
Under the False Claims Act, you will be able to remain anonymous while the government investigates your claim.If you think you should be afforded whistleblower protection, contact a lawyer before you file any complaints. , Not all similarities in pricing exist because of price fixing.
A lot of times, competitors will charge similar prices for their goods because it makes good business sense.
For example, the price of commodities (e.g., wheat) are often identical because the products are almost identical.
The price of those commodities rise and fall together based on market forces and not because of agreements among competitors.
About the Author
Richard Cooper
A passionate writer with expertise in practical skills topics. Loves sharing practical knowledge.
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