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Simple English definitions for legal terms
horizontal scheme
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A quick definition of horizontal scheme:
Horizontal scheme refers to illegal activities that occur between competitors in a market. These activities break antitrust laws and include price fixing, bid rigging, and market allocation. Price fixing is when competitors agree to set or maintain prices at a certain level. Bid rigging is when companies agree in advance to determine the successful bidder for a project at a set price. Market allocation is when competitors agree to divide up a market between them instead of competing openly. These activities are illegal and can result in criminal prosecution. Evidence of meetings or communication between competitors can help detect these activities.
A more thorough explanation:
Horizontal scheme refers to illegal activities that occur between competitors in a market, which violate antitrust laws. These activities include:
- Price fixing: When two or more competitors agree to set, raise, or maintain the prices of their goods or services at a certain level. This can happen at the wholesale or retail level.
- Bid rigging: When companies agree in advance to determine the successful bidder for a project at a set price.
- Market allocation: When competitors agree to divide up a market between them, rather than compete in an open market.
These activities are considered illegal and can result in criminal prosecution. The most effective way to detect these activities is through careful examination of records and evidence of meetings or communication between competitors.
For example, if two competing companies in the same industry agree to set the same price for their products, this is considered price fixing. This eliminates competition and can lead to higher prices for consumers. Similarly, if two companies agree to divide up a market between them, this limits consumer choice and can lead to higher prices as well.