Author: 
Dion Persson
Subtitle: 
Small businesses should avoid price discussions with competitors. Lots of companies are receiving huge fines due to price fixing. Follow these guidelines to stay safe in your small business.

A lot of big companies are in the news recently for price fixing – Qantas and Nintendo were fined, Microsoft was accused (does Microsoft show up in every antitrust matter?) and AT&T and Verizon are denying fixing prices.  So, what can a small business do to protect itself in this area?

Important Tip Small businesses can be liable for acts of their employees. Every small business with employees should make sure to have a good policy to make sure its employees are aware of the antitrust laws and avoid activities that could lead to problems.

What are the rules on price fixing?

Competitors cannot have an agreement that raises, lowers or stabilizes prices or other key terms of a sale.  Competitors generally must establish prices and other terms on their own.  Evidence of price fixing can come from actual written or verbal agreements – or can be established from a pattern of conduct of simultaneously raising or lowering prices without a reasonable business explanation.  Generally, any discussion of present or future pricing or terms of sale with a competitor should be avoided.

What can you do?

A small business can match competitors’ prices and can monitor and match competitors’ ads.  For example, I used to work for a pharmacist that would call around every day to various pharmacies, in a disguised voice, to find out the price at which they were selling various drugs so he could match them or beat them.

Avoid these topics

The Federal Trade Commission has said that antitrust scrutiny may occur when competitors discuss the following topics:

  • Present or future prices
  • Pricing policies
  • Promotions
  • Bids
  • Costs
  • Capacity
  • Terms or conditions of sale, including credit terms
  • Discounts
  • Identity of customers
  • Allocation of customers or sales areas
  • Production quotas
  • R&D plans

 

Guidance

Small businesses have a lot of opportunities to interact with competitors.  It is important to avoid the topics listed above at any of these meetings.  Many large companies have policies that forbid meetings with competitors unless an attorney is present and there is an agenda for the meeting followed by notes of the meeting.  While this is probably impractical for most small businesses, it is a good practice to at least make some notes about the meeting.  And, if you have sales people in your small business, it is a good practice to avoid meetings among sale people from competitive companies.

Additional Information
Important Tip: 
Small businesses can be liable for acts of their employees. Every small business with employees should make sure to have a good policy to make sure its employees are aware of the antitrust laws and avoid activities that could lead to problems.
Marketing copy: 
setting prices in a proper manner