Question

Parallelism means inferring collusion from prices by rival firms that move together in a market. What issues exist with basing charges of coordination on parallelism only? Can you think of any additional requirements beyond parallelism that would limit the likelihood in producing false positives in terms of creating a rule to discover cartels? To assure that we do not miss too many cartels, lets require that our additions do not depend on any direct knowledge of communications between firms. How does this relate to ”Parallelism-plus,” a phrase often used to describe US law/policy as it has been defined through the courts and historical enforcement?

Answer 1

Firms' decisions may be parallel if they face similar economic conditions that require similar actions, including price changes, independently of each other.

Beyond parallelism firms must engage in anti-competitive practices, for example, using non-price terms of business. If they have business reasons for their price setting behavior, independent of each other, then there is no anti-competitive practice, even though there may be parallelism, without any agreement of anti-competitive practices. Such requirements will limit producing false positives of cartels.

This requirement is similar to Parallelism-plus of the US law/policy.