collusion

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collusion

the deliberate suppression of competition between themselves by a group of rival suppliers. Collusion may be confined to a single area of business activity for example prices, or cover a wider range of limitations including coordinated marketing, production and capacity adjustments. Collusion may be practised through formalized arrangements specifying obligations (either in writing or orally) and institutional mechanisms for coordinating behaviour, as in a CARTEL or ANTICOMPETITIVE AGREEMENT/ RESTRICTIVE TRADE AGREEMENT, or operated by more informal means through, for example, an INFORMATION AGREEMENT or CONCERTED PRACTICE.

The purpose of collusion may be to monopolize jointly the supply of a product in order to extract MONOPOLY profits, or it may be a defensive response to poor trading conditions, seeking to prevent prices from dropping to uneconomic levels. Because, however, of its generally adverse effects on market efficiency (cushioning inefficient, high-cost suppliers), and because it deprives buyers of the benefits of competition (particularly lower prices), collusion is usually prohibited outright, by COMPETITION POLICY, as in the UK, under the COMPETITION ACT 1998.

collusion

a form of INTERFIRM CONDUCT pattern in which firms arrive at an agreement or ‘understanding’ covering their market actions. Successful collusion requires the acceptance of a common objective for all firms (for example, JOINT-PROFIT MAXIMIZATION) and the suppression of behaviour inconsistent with the achievement of this goal (for example, price competition). Collusion may be either overt or tacit. Overt collusion usually takes the form of either an express agreement in writing or an express oral agreement arrived at through direct consultation between the firms concerned. Alternatively, collusion may take the form of an ‘unspoken understanding’ arrived at through firms’ repeated experiences with each other's behaviour over time.

The purpose of collusion may be jointly to monopolize the supply of a product in order to extract MONOPOLY profits, or it may be a ‘defensive’ response to poor trading conditions, seeking to prevent prices from dropping to uneconomic levels. Because, however, of its generally adverse effects on market efficiency (cushioning inefficient, high-cost suppliers) and because it deprives buyers of the benefits of competition (particularly lower prices), collusion is either prohibited outright by COMPETITION POLICY or permitted to continue only in exceptional circumstances.

In the UK, under the COMPETITION ACT 1998, collusion in the form of an ANTICOMPETITIVE AGREEMENT/RESTRICTIVE TRADE AGREEMENT is prohibited outright. Previously, under the RESTRICTIVE TRADE PRACTICES ACT, such agreements were allowed to continue, providing ‘net economic benefit’ could be established. See CARTEL, RESTRICTIVE TRADE AGREEMENT, ANTICOMPETITIVE AGREEMENT, OLIGOPOLY, DUOPOLY, INFORMATION AGREEMENT, RESTRICTIVE PRACTICES COURT.

References in periodicals archive ?
While the accused is usually allowed to meet with their lawyers without the presence of a third person, in collusive custody every meeting has to be approved by the prosecutor or the court.
According to a survey conducted by citizen engagement platform, LocalCircles, 53 percent respondents stated that collusive corruption between businesses and staff at PSBs in India is a norm, while 43 percent said it happened only in limited cases of loans/credit.
The hands of the Philippine Competition Commission will be full going after the collusive actors in public bidding in the public sector.
Seabury in Are Settlements in Patent Litigation Collusive? Evidence from Paragraph IV Challenges (NBER Working Paper No.
The discussion is a long lasted one (we can point to Posner (1969) as one of the most influential early works on the topic) and evolves to conclusion that there could exists potential "enforcement gap" whereby firms engaged in strategic interactions may be able to sustain (undesirable) collusive outcomes without violating cartel laws (OECD, 2015).
The infinite-horizon games admit a competitive equilibrium as well as two collusive equilibria where bidders take turns winning the auction at the reserve price (bid rotation).
On 15 December 2014 the Bank announced its settlement with the highway company following an investigation into fraudulent and collusive practices in tendering for an AfDB-financed contract in the Democratic Republic of Congo (DRC).
As Dunn shows in his next article, (2) collusive lawsuits amplify the power of the state over science still further.
In fact, when a firm cheats from the collusive agreement is possible that the rest of cartel partners take some periods in detecting that deviation.
BONUS WINNER: TERESA MABEY, BARRY, VALE OF GLAMORGAN ACROSS DOWN 1 Modern ballroom dance in fast duple time (4,5) 6 Substance formed from the coagulation of milk by acid (4) 7 Collusive international association (6) 9 Capital city of Finland (8) 11 Deviating from the usual (8) 13 Nakedness (6) 14 Assistance (4) 15 Escort (9) 2 Sharp and high-pitched in quality (6) 3 Flight recorder (5,3) 4 Consumes food (4) 5 Horizontal dive (5,4) 6 Logical or natural connection or consistency (9) 8 Person who has a deficiency of natural insulin (8) 10 Protozoan (6) 12 Concept, notion (4) SOLUTION to Crossword March 31 ACROSS 1 Challenge; 6 Ajar; 7 Spasms; 9 Bakewell; 11 Impolite; 13 Outlet; 14 Pair; 15 Margarita.
The conditions are centered on two competition specific concerns, namely the extent to which the post-merger market situation will result and the extent of a possible collusive or coordinated behaviour that would likely prevent or lessen competition.
Additionally, we present a collusive result that we have not found elsewhere in the literature.