Agreements among companies to keep prices at a certain level were known as price-fixing. Price-fixing is a practice where two or more companies agree to set the price of a product or service at a particular level, with the intention of reducing competition and increasing profits.
Price-fixing can take several forms, including horizontal price-fixing, vertical price-fixing, and bid-rigging. In horizontal price-fixing, companies that compete directly with each other agree to set prices at the same level. This type of price-fixing is illegal in many countries, as it leads to an increase in prices, reducing consumer welfare.
Vertical price-fixing occurs when a manufacturer and a retailer agree to set a minimum price for a product. This type of price-fixing is becoming more common in the United States, as some manufacturers are seeking to prevent retailers from discounting their products. However, the US Supreme Court has ruled that vertical price-fixing is illegal under antitrust laws.
Bid-rigging occurs when companies collude to submit bids that are higher than the market price. This type of price-fixing is illegal in many countries, as it reduces competition and can lead to inflated prices.
Price-fixing can harm consumers by leading to higher prices, reduced choice, and lower quality products. It can also harm companies that do not engage in price-fixing, as they face unfair competition from companies that do.
In conclusion, agreements among companies to keep prices at a certain level were known as price-fixing. Price-fixing is illegal in many countries as it reduces competition and harms consumers. Companies that engage in price-fixing are subject to fines, penalties, and legal action, and consumers and businesses alike should report any suspected price-fixing activities to regulatory authorities.