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Price Fixing

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History of Price Fixing

In 1890, the Sherman Antitrust Act was passed by Congress in an effort to check the growth of monopolies. The act stated that any business grouping that attempted to restrict trade or commerce was illegal. The language of the legislation, however, proved to be too vague to curb monopolies. Then, in 1914, the Clayton Antitrust Act was passed to strengthen the Sherman Antitrust Act. It contained more precise language and declared that it was illegal for companies to enter into agreements to fix or control prices such that competition was reduced or eliminated. Price fixing was made a felony.  The Antitrust Division of the United States Department of Justice prosecutes both criminal and civil cases of price fixing. The U.S. Federal Trade Commission also prosecutes civil cases. In addition, many states’ attorneys general also prosecute cases at the state level. Individual citizens and organizations also have the right to bring suit against business entities for price fixing. Cases of international price fixing by private companies or cartels that either are based or sell in the United States are also prosecuted under the United States antitrust laws.  In 1991, the Coalition against Price Fixing attempted to get Congress to pass the Consumer Protection against Price Fixing Act. The bill passed the Senate but failed to become law. The bill resulted from the efforts of a group of retailers from various market sectors to prohibit a manufacturer from setting a minimum price at which its product could be sold and refusing to supply retailers who sold at lower prices. 

Summary of Price Fixing
Price fixing eliminates competition and forces buyers to pay higher prices than the market would normally bear. The practice undermines the concepts that support the free enterprise economy of any country.

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