The Cardinal Sins
Last week we discussed the value of competition law compliance and left you with the Golden Rules of competition.
This week we begin our discussion on the types of conduct that may infringe the Competition Ordinance with the Cardinal Sins: the four most serious types of anti-competitive conduct that will almost always contravene competition law
First Cardinal Sin:
Price Fixing Price fixing is where two or more competitors agree (whether formally or informally, directly or indirectly, or by a nod and a wink) to set prices (including any component or formulae of price), for the sale of goods or services.
A: How much is an apple?
B: $10, no discount sorry
C: $10, no discount sorry.
D: $10, no discount sorry.
Second Cardinal Sin: Output Limitation
Output limitation is where competitors agree to limit the volume or type of goods or services they supply.
A: Can I have 30 apples?
B+C+D: Sorry, we will not sell more than 10 apples to each person. You can buy 10 from each of us.
Third Cardinal Sin: Market Sharing
Market sharing is where competitors carve up a market, whether by the type of goods or services they sell, or by the type or location of customers they serve, and agree not to “overstep” into each others’ territory.
A: Can I have 1,000 apples, oranges and bananas?
B: I will only sell you apples.
C: I will only sell you oranges.
D: I will only sell you bananas.
Fourth Cardinal Sin: Bid Rigging
Bid rigging is where, after having agreed among themselves who the winner should be, competitors participate in a bid for the sake of appearance and use tactics to engineer that result.
A: I need 1,000 apples.
B: That will cost you $90,000.
C: I will only charge you $10,000.
D: That will cost you $85,000.