What Is Collusion?

Collusion is a non-competitive, secret, and sometimes illegal agreement between rivals that attempts to disrupt the market's equilibrium. The act of collusion involve𓃲s people or companies that would typically compete against each other but who conspire to work together to gain an unfair market advantage.

The colluding parties may collectively choose to influence the market supply of a good or agree to a specific pricing level that will help the partners maximize their profits to the detrime𝄹nt of other competitors. Collusion is common am♔ong duopolies.

Types of Collusion

Collusion can take many forms across market🅠 types. Groups collectively obtain an unfair advantage in each scena꧑rio.

One of the most common ways of colluding is 澳洲幸运5官方开奖结果体彩网:price fixing. This occurs when there are a small number of companies in a particular supply marketplace, commonly referred to as an 澳洲幸运5官方开奖结果体彩网:oligopoly. These businesses offer the same product and form an agreement to set the price level. 𒆙Prices may be forcibly lowered to drive 🤡out smaller competitors or they may have an inflated level to support the interest of the group at a disadvantage to the buyer.

Collusion may also occur when companies synchronize their advertising campaigns. The partnering businesses might want to limit the consumers’ knowledge about a product or service for⭕ an added advantage in this case.

Collective partnering through the use of insider information can also be a type of collusion in the financial industry. Colluding groups might have the opportunity to gain several advantages through the sharing of private or 澳洲幸运5官方开奖结果体彩网:preliminary information. This financial collusion can allow the parties to enter and exit trades b🌳efore the shared information is🐓 publicly available.

Factors That Deter Collusion

Collusion is an illegal practice in the United States and this significantly deters its use. 澳洲幸运5官方开奖结果体彩网:Antitrust laws aim to prevent collusion between companies. They make it complicated to coordinate and execute an agreement tꦉo collude. It's also difficult for companies to partake in collusion in industries that have strict supervision.

Defection is another key deterrent to collusion. A company that initially agrees to take part in a collusion agreement might defect and undercut the profits of the remaining members. The company that defects might also act as a 澳洲幸运5官方开奖结果体彩网:whistleblower and report the collusion to the approp🎀riate authorities.

Real-World Example

A New York appeals court upheld a 2013 ruling against tech behemoth Apple in 2015. The multinational technology giant appealed the lower court's finding that the company had illegally conspired with five of the biggest book publishers on the pricing of ebooks.

The New York appeals court found in favor of the plaintiffs. The company’s goals were to promote Apple’s new iPad and to prevent Amazon from undercutting its title prices of ebooks. The case led to a $450 million settlement in which Apple paid purchasers twice their losses.

The Bottom Line

ℱCollusion refers to actions taken by individuals, business firms, or other entities to influence or control pricing or a market in general. These ♏moves are typically arranged in secret and all entities involved can profit.

Collusion is illegal in the United States and laws exist to protect against it at both state and federal levels. Whistleblower laws protect employees in particu♔lar. Speak to a legal representative if you suspect you’ve been targeted for revealing what you suspect to be clandestine marketing activity.