When Companies Engage in Illegal Price Fixing, Investors Often Pay the Price. We Help Investors Nationwide Recover Fraudulent Investment Losses.
Federal law prohibits companies from engaging in price fixing schemes that restrict competition and harm consumers. While companies often engage in these schemes because they think doing so will increase their profits, the reality is that these illegal practices end up costing companies – and their shareholders – significant sums of money. If you invested in a company that is under investigation or that has been penalized for price fixing, you should consult with our price fixing lawyers about your legal rights.
Depending on the circumstances involved, you may have a claim against the company, or you may be entitled to recover your investment losses from your broker or advisor. At Zamansky LLC, our investment loss lawyers represent investors in securities litigation and arbitration nationwide, and we have helped numerous clients recover their investment losses resulting from corporate misdeeds.
What Constitutes Illegal Price Fixing?
Not all pricing restraints amount to price fixing. For example, companies routinely enter into “resale price maintenance” or “RPM” agreements that establish the maximum or minimum amount a retailer can charge, and these agreements are not inherently illegal. In fact, RPM agreements that limit the amount retailers can charge for a product can actually be beneficial to consumers.
With that said, illegal price fixing can take many different forms. For example, RPM agreements can go too far. If a manufacturer sets a minimum price that is anticompetitive, for example (in other words, customers would not pay the price if they had another choice), this can violate federal law. Other forms of illegal price fixing include:
- Collusion Between Competitors – When competing companies agree to charge the same price, this is referred to as collusion. Colluding to charge above-market prices violates state and federal competition laws.
- Market Division and Allocation Schemes – Rather than agreeing to charge uncompetitive prices, in some cases companies will agree not to compete in certain markets—thereby allowing both companies to charge higher prices. This type of market division or market allocation scheme is also prohibited.
- Bid Rigging – Bid rigging is a common practice used to pass inflated prices on to consumers, contractors or government entities. Like collusion and market division, it is generally prohibited.
- Artificial Supply Reduction – Artificially reducing supply in order to increase cost is another form of illegal price fixing. While companies can offer special editions and one-off products, they cannot use these marketing ploys to charge excessive prices.
- Artificial Price Inflation (Price Gouging) – Price gouging involves charging excessive prices for products that are in high demand. It is illegal under the laws of most states; and, while there is currently no federal price gouging law, federal authorities have ways to take action against companies that price gouge as well.
- Monopolization – When a company has no competitors, it can inflate the prices it charges for its products or services. Antitrust laws prohibit monopolistic practices, and corporate mergers that have the potential to create monopolies are subject to oversight and approval at the federal level.
These practices, among others, can lead to civil or criminal enforcement action by state or federal authorities. When a company is under investigation for price fixing (or when a company is penalized for price fixing), this can result in direct and substantial harm to the company’s investors.
When Can You Pursue an Investment Fraud Claim for Price Fixing?
Companies that are accused of price fixing will often see their stock prices tumble. When this happens, investors may have grounds to recover their investment losses. Possible options for recovering stock losses resulting from illegal price fixing schemes include:
- Pursuing a claim against the company. Companies that engage in illegal practices and that fail to disclose material risks to investors can be held liable in securities litigation. This includes litigation involving individual plaintiffs and class action lawsuits.
- Pursuing a claim against your broker or advisor. If your broker or advisor knew or should have known that investing in the company was unreasonably risky, then you may be able to hold your broker or advisor liable in securities arbitration. Securities arbitration claims involve individual investors and are filed with the Financial Industry Regulatory Authority (FINRA).
Schedule a Free and Confidential Consultation With the Securities Fraud Lawyers at Zamansky LLC
Have you suffered investment losses related to price fixing? If so, we can help, and we encourage you to contact us promptly. To discuss your legal rights with one experienced lawyers at Zamansky LLC in confidence, please call 212-742-1414 or request a free consultation online now.