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The Informed Purchaser: Defining Collusion

Occasionally, you may encounter terms or concepts unique to antitrust issues, competition, and schemes to exploit purchasers. In this installment of “The Informed Purchaser,” we address collusion.

Collusion is a conspiracy between two or more parties to inhibit fair competition or to defraud competitors. A conspiracy exists when parties have “…a conscious commitment to a common scheme designed to achieve an unlawful objective” Monsanto Co. v. Spray-Rite Service Corp., 104 S.Ct. 1464 (1984). Some examples of collusion are sham or complementary bidding (bid rigging), price fixing, and market allocation.

Collusion may be encountered in many different markets in many different ways. And, one type of collusion does not preclude another; in fact, they often occur together. For example, some conspirators collude to fix prices and allocate markets simultaneously. Collusive behavior is especially possible in markets with few competitors and/or standardized (homogeneous) products.