Price Fixing Law and Legal Definition

Price fixing is an arrangement in which several competing businesses make a secret agreement to set prices for their products to prevent real competition. It is a criminal violation of federal antitrust statutes.Price fixing also includes secret setting of favorable prices between suppliers and favored manufacturers or distributors to beat the competition.

Vertical price fixing pertains to arrangements between a manufacturer, distributor, supplier or retailer. Horizontal price fixing, which would involve competitors colluding to set prices, remains illegal. Courts have held that vertical maximum price fixing, like the majority of commercial arrangements subject to the antitrust laws, should be evaluated under the rule of reason. Therefore, suppliers of goods and services don't necessarily violate antitrust laws by setting maximum prices their retailers can charge.