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Disguised Price Fixing

Price fixing is an agreement between participants on the same side in a market to buy or sell a product, service, or commodity only at a fixed price, or maintain the market conditions such that the price is maintained at a given level by controlling supply and demand.

Price fixing is illegal in the UK (with a few exceptions like newspapers), but a supermarket executive will seldom let the law get in the way of a few extra million pounds. In the past 10 years UK supermarkets have been fined with such frequency that it is not practical to attempt to calculate the total sum - I can, however, say that it is in the 100s of millions of pounds.

Supermarkets are at it again but this time rather than shady deals being brokered by executives in secret meetings it is happening in plain sight. They are doing it in such a way that the general opinion is that they are actually giving us better value for money. I’m referring to the custom of price matching, a very cleverly disguised way of price fixing. Supermarkets can now increase prices, safe in the knowledge that they won’t lose any customers because consumers know that “any difference would be offset at the till”, but since every supermarket is doing this whichever is cheapest is effectively setting the prices for the rest of them. Previously supermarkets would have had to collude to fix prices but they can now do it without any communication and thus they are immune to the current price fixing laws.

Article written by Daniel Chatfield