Price fixing (ss. 44ZZRF, 44ZZRG, 44ZZRJ and 44ZZRK)

For price fixing agreements to be considered illegal:

• there must be a ‘contract, arrangement or understanding’ (the agreement)
• two or more of the parties to the agreement must be competitors
• the agreement must have the purpose or effect (or likely effect) of fixing, controlling or maintaining the price of goods or services
• what is fixed must be the price for—or a discount, allowance, rebate or credit in relation to—goods or services supplied or acquired by the parties to the agreement.

Sometimes competing businesses will sell goods or services at the same or similar price levels so that the price fluctuations of one are matched by equivalent fluctuations by the others.

Although this may seem like price fixing behaviour, it is not necessarily the result of collusive behaviour between competitors. Legitimate commercial reasons may include:

• highly visible prices displayed by competitors (e.g. petrol price boards) allowing competitors to quickly adjust their prices to match price movements (known as 'parallel pricing')
• a dominant firm may have lower costs than other firms in the market. In order not to be undercut, the others match the price of the dominant firm with the dominant firm becoming a ‘price leader’ and the others ‘price followers’.