What Is Meant by Anti-Competitive Agreement

An anti-competitive agreement is an agreement between two or more businesses that works against fair competition in the market. These agreements may be made to limit competition, maintain prices, or control the supply and demand of a particular product or service.

Anti-competitive agreements can take a variety of forms. For example, a group of businesses may agree to divide up a market or territory, each taking a specific area for themselves. This limits competition and allows each business to charge higher prices than they could if they were competing with each other.

Another common form of anti-competitive agreement is price fixing. In this scenario, businesses agree to set a fixed price for a particular product or service, regardless of market demand or other factors. This prevents price competition and allows businesses to charge an artificially high price.

Anti-competitive agreements can also take the form of supply control. In this situation, businesses agree to limit the amount of a particular product or service they will produce or offer, again limiting competition and allowing for higher prices.

These types of agreements are illegal in most countries, including the United States, under antitrust laws. Antitrust laws are in place to promote fair competition and prevent monopolies or oligopolies that can harm consumers and the market as a whole.

If a business is found to be engaging in an anti-competitive agreement, they can face significant penalties and fines. This can include having to pay damages to other businesses or consumers that were harmed by the agreement.

It is important for businesses to be aware of antitrust laws and to avoid engaging in any behavior that could be considered anti-competitive. This not only protects them from legal consequences but also helps to promote fair competition in the market, benefiting both businesses and consumers.