Most Read Contributor in Hong Kong, September 2016
Cardinal Sin No. 1 – Price Fixing
Last week we gave you an overview of the four Cardinal Sins
under the Competition Ordinance. This week we discuss Cardinal Sin
No.1 – price fixing.
Price fixing is one of the worst violations of competition law
that will attract the most serious fines. While price fixing may
sound straightforward and intuitive, in practice, the legal concept
of price fixing captures a wide array of conduct, some of which you
may find yourself inadvertently engaging in.
In this article we examine the elements of price fixing and use
examples to illustrate how you may avoid entering into a price
Price fixing refers to an
agreement between competitors to fix,
maintain, increase or otherwise control prices.
WHY FIX PRICES?
Price fixing inflates prices and therefore profits by preventing
competitors from undercutting each other on price.
WHAT IS AN AGREEMENT?
A mere "meeting of minds" suffices to bring
anti-competitive conduct within the scope of the First Conduct
Rule. Anti-competitive agreements do not have to be, and indeed,
are most often not, set in stone.
To illustrate, an agreement may arise from any form of
What is price?
The concept of price in a competition law context encompasses
all components of price. This may include any discount, rebate,
allowance, price concession or other advantage in relation to the
supply of goods or services:
An agreement to fix any of the above components could constitute
How are prices fixed?
As mentioned above the concept of price fixing includes any form
of controlling prices, such as maintaining or increasing prices.
Below are some examples of conduct that can amount to
Agreeing to a fee schedule.
Capping the level of discount.
Publishing "recommended" fee schedules which
competitors then follow.
Next week we will take a look at Cardinal Sin No.2 –
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This article provides information and comments on legal
issues and developments of interest. The foregoing is not a
comprehensive treatment of the subject matter covered and is not
intended to provide legal advice. Readers should seek specific
legal advice before taking any action with respect to the matters
discussed herein. Please also read the JSM legal publications
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