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Home ServiceFAQsConcerted ActionsSince small companies sometimes follow large companies’ price decisions in an oligopoly market, will this constitute a concerted action even though they didn't coordinate or reach agreement on prices?
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10. Since small companies sometimes follow large companies’ price decisions in an oligopoly market, will this constitute a concerted action even though they didn't coordinate or reach agreement on prices?

A10:
 
The term "concerted action" as referred to in Article 14 of this Act refers to an act to mutually restrict the activities of enterprises, such as an act by an enterprise that enters into a contract, agreement, or other forms of mutual understanding with other enterprises with whom it competes to jointly determine the prices of goods or services, or to restrict quantities, technology, products, equipment, trading counterparts, or trading territories. The other forms of mutual understanding include written or verbal, as well as expressed or implied agreements. In an oligopoly market, small companies sometimes follow the selling price of large companies. This could be considered as an act of uniformity caused by the market structure. In case of an absence of mutual understanding, such an act shall not be deemed as a kind of concerted action. Competition law authorities around the world tend in practice to treat such acts as concerted actions where there exists relevant indirect evidence sufficient to determine that they are deliberate parallel acts. In practice, the Commission has gradually moved toward the position that concerted action is also constituted where enterprises knowingly and deliberately reach a non-binding consensus or understanding regarding their future market actions through a communication of intent.

Relevant article(s) of law: Fair Trade Act, Article 14

Updated at:2016-02-22 11:47:11
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