When business competitors all agree to set their prices at a certain number that only benefits one side of the market, this is price fixing. The prices are either set high, stabilized, discounted, or fixed.
About Price Fixing
Price fixing happens in a variety of ways. Groups of vendors agree to set all the prices high, and the government has no choice but to purchase at the high price. This is a dangerous form of Government Contract Fraud.
Price fixing is illegal only when a group agrees to fix prices. A business can legitimately want to obtain the best pricing for themselves and may price themselves too high in the market space. However, unless the business works with others with the intent to squeeze out lower competitors, this is not price fixing.
Common Price Fixing Practices
- Establishing or adhering to price discounts
- Holding prices firm
- Eliminating or reducing discounts
- Adopting a standard formula for computing prices
- Maintaining certain price differentials between different types, sizes, or quantities of products
- Adhering to a minimum fee or price schedule
- Fixing credit terms
- Not advertising prices
Previous Price-Fixing Cases
In 2014, the government fined Bridgestone $425 million for its price-fixing car parts. During the four-year investigation, whistleblowers helped uncover 26 companies agreed to fix the prices of starter motors, seat belts, radiators, ball bearings, exhaust systems and up to 150 more parts. There was a total of $2 billion in fines.
Even Apple was in trouble for price fixing their e-books. They were selling the same e-book as Amazon for a markup. They worked with book publishers to try to squeeze out Amazon, who held the largest market share.
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