Fair Trade Law Q&A - Concerted ActionsFair Trade Law Q&A - Concerted Actions| In an oligopolistic market, smaller firms frequently align their pricing with that of larger firms. Absent any agreement or coordination among competitors regarding pricing, would such conduct nevertheless constitute a concerted action? |
Article 14 of the Fair Trade Act defines "concerted action" as conduct by competing enterprises at the same production and/or marketing stage, by means of contract, agreement or any other form of mutual understanding, jointly determine the price, technology, products, facilities, trading counterparts, or trading territory with respect to goods or services, or any other behavior that restricts each other's business activities, resulting in an impact on the market function with respect to production, trade in goods or supply and demand of services. Such mutual understandings may be written or oral, explicit or implicit.
In oligopolistic markets, smaller firms often adopt the pricing established by larger firms. Such parallel conduct may merely reflect the structural characteristics of the market. Accordingly, where no agreement exists among competitors, such conduct shall not be regarded as concerted action. However, competition authorities in other jurisdictions have, in practice, treated conscious parallelism as unlawful concerted conduct where sufficient circumstantial evidence demonstrates conscious parallel behavior among competitors. In practice, the Fair Trade Commission has likewise gradually developed the position that concerted action may also be established where enterprises, with knowledge and intent, reach a nonbinding consensus or tacit understanding regarding future market conduct through a meeting of minds.
Relevant Provision: Article 14 of the Fair Trade Act.