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Anti-competitive Practices

Anti-competitive practices are actions or strategies employed by businesses, individuals, or entities to undermine or distort competition in a market, often to their own advantage but at the expense of consumers, other competitors, or the market as a whole. These practices are generally considered harmful and may be illegal in many jurisdictions.

Price fixing: Competing businesses collude to set prices at a fixed level rather than competing with each other. This eliminates price competition and harms consumers by keeping prices artificially high.

Bid rigging: Competing companies conspire to manipulate the bidding process for contracts or projects to ensure that a particular company wins. This practice reduces competition and can lead to higher prices for the buyer.

Market allocation: Competitors divide markets or customers among themselves, agreeing not to compete with each other in designated territories. This reduces consumer choice and artificially maintains prices.

Exclusive dealing: Businesses enter into agreements that require a retailer or distributor to exclusively carry their products or services, preventing other companies from entering the market and limiting consumer choice.

Tying and bundling: Tying occurs when a company makes the purchase of one product contingent on buying another product. Bundling involves offering products or services as a package deal, which can limit consumer choice and competition.

Predatory pricing: A company deliberately prices its products or services very low, often below cost, to drive competitors out of the market. Once competitors are eliminated, the company raises prices.

Refusal to deal: A company refuses to do business with a particular vendor or customer, limiting competition and consumer choice.

Collusive agreements: Competing companies may enter into secret agreements or alliances aimed at manipulating market conditions, such as controlling production levels or agreeing on market shares.

Resale price maintenance: Manufacturers or suppliers establish a minimum resale price for their products, limiting price competition among retailers. While this may protect small businesses, it can also reduce consumer choice and potentially harm competition.

Monopoly practices: Companies with significant market power engage in practices that harm competition, such as monopolistic pricing, exclusionary behaviour, or predatory conduct.

Abuse of dominance: Dominant companies may use their market power to harm competition by engaging in practices such as excessive pricing, tying, or refusal to deal.

Misuse of intellectual property: Companies misuse their intellectual property rights, such as patents or copyrights, to prevent competition or hinder innovation, rather than protecting legitimate interests.

Anti-competitive practices are generally prohibited in many countries to promote fair competition, protect consumer interests, and maintain economic efficiency. Regulatory authorities, like antitrust agencies or competition commissions, are responsible for enforcing antitrust and competition laws to prevent and penalise such practices. These laws are designed to ensure that markets remain open, competitive, and beneficial for consumers and businesses alike.

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