Which of These Is Not an Example of Price Fixing?

Price fixing refers to an illegal practice in which competitors collude to set prices, thereby eliminating competition and manipulating the market to their advantage. These actions harm consumers by creating an artificial environment where prices are artificially inflated. However, not all actions related to pricing fall under the umbrella of price fixing. In this article, we will explore various scenarios and identify which one is not an example of price fixing.

1. Manufacturer’s Suggested Retail Price (MSRP)
The MSRP is a suggested price set by the manufacturer to guide retailers on pricing their products. While retailers are not obligated to follow the MSRP, it is not considered price fixing since manufacturers are not colluding with competitors to set prices.

2. Dynamic Pricing
Dynamic pricing refers to a strategy where prices are adjusted based on changing market conditions, demand, or other factors. This technique is used by many businesses, especially in the e-commerce sector, to optimize prices and maximize profitability. Dynamic pricing is not an example of price fixing as it is based on market-driven factors rather than collusion.

3. Temporary Discounts or Sales
Offering temporary discounts or sales is a common marketing strategy employed by businesses to attract customers and boost sales. These discounts are typically offered for a limited period and do not involve collusion among competitors. Hence, temporary discounts or sales are not examples of price fixing.

4. Price Discrimination
Price discrimination occurs when businesses charge different prices to different customers based on factors such as location, purchasing power, or discounts offered. While this practice may seem unfair, it is not considered price fixing as it does not involve collusion between competitors.

5. Predatory Pricing
Predatory pricing refers to a strategy where a company intentionally sets prices below cost to drive competitors out of the market. While predatory pricing can be anti-competitive, it is not price fixing as it involves a single company rather than collusion among competitors.

6. Minimum Advertised Price (MAP) Policies
MAP policies are agreements between manufacturers and retailers that set a minimum price at which a product can be advertised. Though MAP policies can limit price competition, they are not considered price fixing since they do not involve collusion between competitors.

7. Exclusive Dealing Agreements
Exclusive dealing agreements occur when a supplier restricts a buyer from purchasing products from competitors. While this can limit competition, it is not considered price fixing as it does not involve collusion among competitors to set prices.

8. Resale Price Maintenance (RPM)
RPM refers to a practice where a manufacturer or supplier sets a minimum price at which a product can be sold by retailers. RPM can be anti-competitive, but it is not classified as price fixing since it does not involve collusion among competitors.

9. Collusion to Fix Bidding Prices
Collusion to fix bidding prices involves competitors agreeing to rig the bidding process to ensure that a specific company wins the contract. This practice is a clear example of price fixing as it manipulates prices, eliminates competition, and violates antitrust laws.

10. Market Sharing
Market sharing occurs when competitors divide markets among themselves to avoid competition in specific regions or with specific customers. This practice is considered price fixing as it restricts competition and allows competitors to set prices without market forces at play.