Collusion is when two or more parties secretly agree to defraud a third-party of their rights or accomplish an illegal purpose.
Collusion in Antitrust Law:
Horizontal collusion exists where competitors at the same market level agree to fix or control the prices they will charge for their respective goods or services. For instance, two parties may collude by limiting or restricting supply, sharing insider information, or dividing the market.
Parallel pricing behavior is suggestive of collusion only where parallel conduct was inconsistent with the defendant’s individual self-interest and was not a rational response to market conditions.
Tacit collusion, sometimes called oligopolistic price coordination or conscious parallelism, is the process (not in itself unlawful) by which firms in a concentrated market create, in effect, monopoly power by setting their prices at a profit-maximizing, supra-competitive level after recognizing their shared economic interests and interdependence with respect to price and output decisions.
See: Sherman Antitrust Act,Clayton Act, § 2(a), as amended by Robinson-Patman Price Discrimination Act, 15 U.S.C. § 13(a); 15 U.S.C. § 2.
[Last updated in January of 2022 by the Wex Definitions Team]