Horizontal Agreement Significato: What It Means for Businesses
Horizontal agreement significato is a term used to describe an agreement between two or more competitors to fix prices, limit production or sales, or divide markets. This practice is illegal and anticompetitive under most competition laws worldwide, including those of the European Union, the United States, Canada, and the United Kingdom.
The goal of horizontal agreements is to limit competition in a particular industry or market by artificially inflating prices, reducing output, and eliminating rivals. This can lead to decreased consumer welfare, higher prices, and decreased innovation. Therefore, horizontal agreements are a serious threat to a competitive market, and businesses must avoid engaging in such practices.
Types of Horizontal Agreements
There are several types of horizontal agreements, including price-fixing, market allocation, output restriction, and bid-rigging.
Price-fixing: This is an agreement between competitors to set prices at a certain level, which may be above what would occur in a competitive market. This practice can harm consumers by increasing prices of goods and services.
Market allocation: This is an agreement between competitors to divide markets by geography, customer type, or product type. This practice can restrict competition by allowing each competitor to operate in a different market, which may not be as competitive as if they all competed in the same market.
Output restriction: This is an agreement between competitors to limit their production or reduce output to decrease competition. This practice can lead to higher prices and reduced consumer choice.
Bid-rigging: This is an agreement between competitors to coordinate bidding on contracts, often by agreeing who will win the bid or by submitting non-competitive bids. This can lead to higher prices and can prevent other competitors from winning contracts.
Horizontal Agreements and Cartels
Horizontal agreements differ from cartels, which are more formal and long-lasting agreements between competitors. Cartels are often international, involve more than two competitors, and are designed to control prices, output, or market share. While horizontal agreements are illegal, cartels are even more harmful to competition, and they can result in severe penalties, including fines and imprisonment.
How to Avoid Horizontal Agreements
Businesses must be aware of the anticompetitive nature of horizontal agreements and take steps to avoid engaging in such practices. This includes:
– Avoiding discussions with competitors on prices, markets, or output.
– Implementing a competition compliance program that trains employees on antitrust laws and encourages them to report any suspicious behavior.
– Conducting regular internal audits to ensure compliance with competition laws.
– Seeking legal advice before engaging in any business agreement that involves competitors.
Horizontal agreements are illegal and anticompetitive practices that restrict competition, harm consumers, and reduce innovation. Businesses must be aware of the risks of engaging in such practices and take steps to avoid them. By implementing competition compliance programs and seeking legal advice, businesses can avoid the serious consequences of engaging in horizontal agreements.