When a product or service becomes scarce, people are likely to pay more for it.
Agreements where competitors restrict output, supply or acquisition of goods or services are illegal as they can have the effect of raising prices and limiting consumer access to the goods and services they want. In particular, competing businesses must not agree to prevent, restrict or limit:
- the production or likely production of goods
- the capacity or likely capacity to supply services
- the supply or likely supply of goods or services to particular persons or classes of persons
- the acquisition or likely acquisition of goods or services from persons or classes of persons.
The salmon growers' industry association, comprising of five major players in the salmon industry, devised a plan to lift falling salmon prices as part of a broader plan to ease the financial difficulties plaguing the industry. The association asked members to sign an agreement under which they committed to cull at least 10 per cent of their salmon stocks. This amounted to an agreement to restrict or limit the production of goods. It therefore amounted to an illegal agreement to restrict output.