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2 Real Life Instances of anti Competitive Agreements

Anti-competitive agreements occur when two or more companies mutually agree to restrict competition in a particular market. These agreements can take many forms, from price fixing to exclusionary contracts. Unfortunately, anti-competitive agreements can have damaging effects on both consumers and the market as a whole. Here are two real-life examples of anti-competitive agreements that have made headlines in recent years.

1. The E-book Price Fixing Scandal

In 2010, five major publishers – Hachette, HarperCollins, Macmillan, Penguin, and Simon & Schuster – were accused of conspiring with Apple to fix e-book prices. The Department of Justice claimed that the publishers and Apple entered into an agreement that would enable them to set e-book prices artificially high, thereby preventing competitors from offering lower prices and undermining the traditional print book market.

The publishers allegedly used a pricing model called an “agency model,” which allowed them to set the prices of their books instead of the retailer. In exchange for using this model, the publishers agreed to give Apple a 30% commission on all e-book sales. The result was higher prices for e-books, and a decrease in competition in the e-book market.

The DOJ filed a lawsuit in 2012, and by 2013, all five publishers agreed to settle the lawsuit. As part of the settlement, they agreed to eliminate agency contracts with e-book retailers for two years, and to allow retailers to set their own prices. Apple also settled, paying $450 million to consumers.

2. The Russian FAS Investigation into Google

In 2016, Russia`s Federal Antimonopoly Service (FAS) launched an investigation into Google for allegedly abusing its dominant market position to suppress competition. The investigation focused on Google`s policy of requiring smartphone manufacturers to preinstall Google`s suite of apps, including Google Play, Gmail, and Maps, in order to access the Google Play Store. The FAS claimed that this policy prevented other app developers from gaining a foothold on Android devices, as consumers were unable to download alternative app stores.

As part of the investigation, the FAS ordered Google to remove the requirement for smartphone manufacturers to preinstall Google`s suite of apps on Android devices. Google appealed the ruling, but ultimately lost the case. In 2018, the FAS imposed a fine of $6.85 million, and Google agreed to comply with the ruling and allow smartphone manufacturers to preinstall competing apps on Android devices.

These two examples illustrate the potentially harmful effects of anti-competitive agreements on consumers and the market. It is important for companies to compete fairly and avoid entering into agreements that restrict competition. As consumers, we should be aware of these issues and support laws and regulations that promote fair competition.