Question

Recently hired by a company in the children ́s clothing industry you are responsible for sales in Jutland and northern part of Germany. So far the company ́s market share in Jutland has been small. One day Michelle – who is employed by a competing business enjoying a large market share in Jutland – approaches you with a proposal. Michelle asks you if it would be possible to reach a verbal agreement splitting up the Jutland market and fixing prices.

a)The agreement is within the freedom of contract and unproblematic

b)The agreement is legal provided only Danes are involved

c)If in writing the agreement is contrary to the competition act

d)The agreement is contrary to the competition act

EXPLAIN YOUR ANSWER

Answer 1

The correct option is d.

(a) Making a verbal agreement is within the freedom of contract but it is totally illegal to fix prices among competitors because this will restrict competition.

(b) Even if the competition is limited only to Danes and northern region of Germany, then also fixing of the prices is not allowed and is considered as illegal.

(c) Finalizing thr contract with a written agreement is not against the competition act but fixing prices with the competitors is against thr competition act.

(d) The contract is against the competition act because of the fixing of the prices. Fixing the prices will lead to limiting of the competition and might also reduce in the choices available for the consumers. So such a contract should not be agreed to.