Explain Conspiracies of a Competition Act

Question

Explain Conspiracies of a Competition Act?

Answer 1

The Act prohibits cartels (called trusts in the U.S., hence the expression “anti-trust law”) and any conspiracy by two more persons to unduly lessen competition. To determine whether an agreement has seriously reduced competition, the courts must first determine the relevant market in terms of product and geographic area and then decide whether the accused parties had a large enough market share to injure the competition.

Because it is difficult to prove that there was an agreement to lessen competition, the existence of such an agreement is often inferred from tactics used. Methods of reducing or eliminating competition include parallel pricing (adopting similar pricing strategies), setting quotas (limiting production), market sharing (agreeing to divide up the market by territory), and product specialization (agreeing to each make/sell different products).

Another specific prohibited offence is bid rigging, where an agreement is made not to submit a bid, or an agreement is made in advance regarding what bids will be submitted in response to a call for bids or tenders.