Price Fixing - Legal Status in The United States and Canada

Legal Status in The United States and Canada

In the United States, price fixing can be prosecuted as a criminal federal offense under section 1 of the Sherman Antitrust Act.

Criminal prosecutions may only be handled by the U.S. Department of Justice, but the Federal Trade Commission also has jurisdiction for civil antitrust violations. Many State Attorneys General also bring antitrust cases and have antitrust offices, such as Virginia, New York, and California.

Private individuals or organizations may file lawsuits for triple damages for antitrust violations, and depending on the law, recover attorneys fees and costs expended on prosecution of a case.

Under American law, exchanging prices among competitors can also violate the antitrust laws. This includes exchanging prices with either the intent to fix prices or if the exchange affects the prices individual competitors set. Proof that competitors have shared prices can be used as part of the evidence of an illegal price fixing agreement. Experts generally advise that competitors avoid even the appearance of agreeing on price.

Since 1997, US Courts have divided price fixing into two categories: vertical and horizontal maximum price fixing. In State Oil Co. v Khan, the US Supreme Court held that vertical price fixing is no longer considered a per se violation of the Sherman Act, but horizontal price fixing is still considered a breach of the Sherman Act. Also in 2008, the defendants of United States v LG Display Co., United States v. Chunghwa Picture Tubes, and United States v. Sharp Corporation heard in the Northern District of California, agreed to pay a total sum of $ 585 million to settle their prosecutions for conspiring to fix prices of liquid crystal display panels, which was the second largest amount awarded under the Sherman Act in history.

In Canada, it is an indictable criminal offense under section 45 of the Competition Act. Bid rigging is considered a form of price fixing and is illegal in both the United States (s.1 Sherman Act) and Canada (s.47 Competition Act). In the United States, agreements to fix, raise, lower, stabilize, or otherwise set a price are illegal per se. It does not matter if the price agreed upon is reasonable or for a good or altruistic cause or if the agreement is unspoken and tacit. In the United States, price-fixing also includes agreements to hold prices the same, discount prices (even if based on financial need or income), set credit terms, agree on a price schedule or scale, adopt a common formula to figure prices, banning price advertising, or agreeing to adhere to prices that one announces. Although price fixing usually means sellers agreeing on price, it can also include agreements among buyers to fix the price at which they will buy products.