Question

is price fixing illegal and how can it be eradicated?

Answer 1

Price fixing happens when competitors determine prices in agreement with each other. Consumers expect that companies determine prices freely based on supply and demand of products and services and not due to any agreement between companies. In United States of America, an agreement to fix price among competitors is illegal. Price fixing is illegal when competitors decide to maintain a price be it higher, nominal or lower without any legitimate explanation. There are several items where prices are kept same like commodities, wheat, rice, oil, gold etc. In case of commodities, the prices are generally decided by government.

To eradicate price fixing, Sherman Antitrust Act of 1890 was proposed by Senator John Sherman. Price fixing is a criminal law under this act. It is violation of federal trade commission and state antitrust laws. This law came into existence to make sure that economy is practicing fair competition. It outlawed cartels and monopolies.