3. BUISNESS COLLUSION
DEFINITION
A secret agreement between two or more
firm to increase or decreasing the price
of their product, rigging the market
price to reach their opportunity to be
more profitable. It also a price war
between firms.
5. EXAMPLE:
1. Shell and BP accused of collusion in South Africa
On year 2009, six companies of South Africa set up the price of diesel
artificially high to make themselves more profitable.
2. Barclays hit for LIBOR fixing
Barclays have been fined for distorting interest rates .Barclays will pay $453m for
using underhand tactics, including price-fixing, to rig the markets
3. GlaxoSmithKline fined $3 billion for off-label
GSK targeted the antidepressant Paxil at patients under age 18 when it was approved
only for adults, and promoted the drug Wellbutrin for uses it was not approved - this
tackles weight loss and treatment of sexual dysfunction.
4. Price fixing in South Korea
Samsung Electronics and LG Electronics have been fined for conspiring to fix the
prices of some appliances. The regulator said the two firms held secret meetings in
2008 and 2009 to agree on prices for some machine products.
8. NEGATIVE IMPACT OF
BUISNESS COLLUSION
•Regularly leads to reduced quality
•Harm consumers’ welfare
•Increase burden to consumers
9. - The government can enforce the laws related
to business collusion
-Persuade procurement officials to report
suspicions of collusion with strong evidence
-Increase the amount of bidders
- Preserve procurement records such as bid list
10. Individual & Public effort
-Spread through media about
business collusion
-Give advice to certain party or firm
-Give out a campaign
11. -Kuznets, P. W. (1998). Reviews. Economic Development & Cultural
Change, 47(1), 220.
-Reske, H. J. (1993). WAS IT COLLUSION OR JUST GOOD
BUSINESS?. ABA Journal, 79(5), 76.
-Drnevich, P. L., & Croson, D. C. (2013). INFORMATION TECHNOLOGY
AND BUSINESS-LEVEL STRATEGY: TOWARD AN INTEGRATED
THEORETICAL PERSPECTIVE. MIS Quarterly, 37(2), 483-509.
-Bagwell, K., & Staiger, R. W. (1997). Collusion over the business
cycle. RAND Journal Of Economics (RAND Journal Of Economics), 28(1),
82-106.
- Cook Jr., P. W. (1963). Fact and Fancy on Identical Bids. Harvard
Business Review, 41(1), 67-72.
12. -MICHIGAN BRIEFS. (2012). Crain's Detroit Business, 28(27), 0002.
-Ogawa, Y., & Ono, Y. (2011). The Byrd Amendment as Facilitating a
Tacit International Business Collusion. Review Of International
Economics, 19(5), 877-893. doi:10.1111/j.1467-9396.2011.00992.x
-Kimmons, R. (2013). Examples of Collusion Between Firms. Retrieved
from Chron: http://smallbusiness.chron.com/examples-collusionbetween-firms-18797.html
