1. | Price fixing |
| Agreement made between businesses to fix, control or
maintain the prices of goods and services that are charged onto consumers in
order to reap very high profits. It may also happen indirectly, which is when
businesses set similar credit terms and discounts.
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| Hypothetical Case Study
Alfro Transport Association was was found to have made an agreement to a
10% increase on the transport charges of goods delivery by land from the
port, in their Annual General Meeting in 2016.
The decision of the Annual General Meeting was published in the local
newspaper.
When investigated, the Association stated that the agreement to increase
prices was due to increase in fuel charges. While this may be a reason for
price increase, it does not justify a collective decision to make agreement
to increase price in a collective manner. Any decision to price increase must
be made independently.
Price fixing agreement is prohibited under Section 11 of
the Competition Act.
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2. | Supply Control |
| This refers to the agreement made between businesses to
limit the quantity of goods and services provided which will indirectly
increase price.
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| Hypothetical Case Study Five competing steel suppliers, who were also members of
Steel Association, had reached an agreement during their Annual General
Meeting to restrict the volume of steel production. The chairman of the Association voiced his concern
regarding the supply of steel that outstripped the market demand. He argued that increasing the volume of
output will only drive prices lower and suggested to reduce the production
output by at least 20 percent, in order to drive the prices of steel up. This was agreed upon by all members of the
Association. This agreement of controlling supply is in breach of
Section 11 of Competition Act.
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3. | Market
Sharing |
| Agreement
made between businesses to each sell to different segments of a market,
either in terms of geographical area or size or type of consumer. Consequently,
competition will be eliminated as each has its own allotted segments all to
itself and as a result, consumers’ choices will be restricted. |
| Hypothetical Case Study In six significant meetings between 2012 and 2014, three
fund management companies were found to reach a series of agreements, with
the object to divide the market between themselves based on geographic areas
and agree not to poach each other's clients. The conduct has impacted in consumers having less choice
in the fund market and to buy with less bargaining power.
This agreement to divide customers and share the market
falls under the prohibition of Section 11 of anti-competitive agreements of
the Competition Act.
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4. | Bid Rigging |
| This
refers to agreement made between businesses to raise prices to purchasers
through manipulating procurement process which then eliminate competition through pre-determined
winner. |
| Hypothetical
Case Study Four companies namely Vela Inc, Winark, Rua, and IED
colluded during a tender and intentionally submitted losing bids and
predetermined the winner. Vela Inc sent its tender information to the other
companies for reference via email. Their collusion was detected by the
presence of common spelling mistakes in all four tender applications. Colluding any agreement (written or oral) between bidders
that limits or reduces competition in a tender is prohibited under Section 11
of Competition Act.
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