Price-fixing is nothing new in the business world although in most countries it is illegal. Price fixing is an agreement between two or more competitors to take steps to raise, lower, maintain or stabilize the price of a commodity. Price-fixing plans are frequently developed in private and are sometimes difficult to detect. In such scams, the companies benefit financially while the consumers spend more. Here are five price-fixing conspiracies that have gotten much attention over the years.
1. Laundry Detergent
In 2011, Procter and Gamble and their competitor, Unilever, acknowledged that they were running a cartel for laundry soap. The two companies, along with another, created more environmentally friendly products. They decided to scale back on the size of their products but not reduce the price. Later, they increased the size. Proctor and Gamble and Unilever were fined $456 million after they got a ten percent reduction for admitting their fraudulent activities and disclosing some information. The third company was the whistleblower and was thus not fined.
2. Zipper Cartel
Many garments require zippers and other fasteners. This is big business and has attracted. In 2007, three companies were found guilty of being involved in a scam where they set minimum pricing, planned price rising, shared markets and assigned customers. Basically, they decided on which business would be allowed to defraud which clients. Coats of Britain and YKK of Japan were the two companies that were fined $459 million. The third company alerted the authorities of the price-fixing scam and was not fined.
3. Airline Price-Fixing
Executives at international carriers rushed to find a solution when the airline sector crashed ten years ago, so they wouldn’t go bankrupt. Federal prosecutors claimed that they devised a major price-fixing conspiracy. Between 2000 and 2006, they inflated passenger and cargo fuel surcharges to compensate for lost profits. Cargo shippers and international passengers lost millions as a result of the airlines’ crimes. Twenty one airlines were fined a total of $1.7 billion, making it the largest scams of its kind.
4. The Electrical Conspiracy
The US Senate cracked down on GE and Westinghouse, two electrical equipment producers, in the 1950s for setting the price of electrical turbines. The two businesses collaborated with a few smaller rivals to control the pricing of the heavy equipment they sold to the government in an effort to preserve their market dominance. When forty-seven companies provided the Tennessee Valley Authority similar bids for three consecutive years, this became a red flag. The intention was for each company to get an opportunity to win a bid.
5. Television Price-Fixing
Millions of television sets are sold yearly. Samsung and LG are two of the largest competitors. These two companies were found guilty of engaging in a price fixing scheme for televisions as well as laptops and notebooks. The authorities found that this began between 1999 and 2006. These issues were settled in the US in 2011. Samsung and LG were fined $553 million in the US and $47 million in China. Samsung, LG and some other companies such as Phillips and Panasonic were slapped with a fine of $1.92 million by the European Union. Regardless of all these fines which they settled, Samsung and LG continue to thrive.
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