Price Fixing – What are Cartels and How to Fight Them?

Price Fixing – What are Cartels and How to Fight Them?
Jakub Chajdas

Jakub Chajdas

Partner / Attorney-at-law

Price fixing is an act of unfair competition. It involves an illegal agreement between companies to control prices and restrict competition. Find out more about it and its legal consequences.

What is Price Fixing?

Price fixing is one of the most common illegal anti-competitive agreements. It involves setting prices and other terms for purchasing or selling goods. It can occur either directly or indirectly.

Price fixing is not specifically regulated in the legislation. Yet, it can be linked to the concept of “agreements that restrict competition”. These are specified in the Act of 16 February 2007 on Competition and Consumer Protection.

According to its wording: “Any agreements which have as their object or effect the prevention, restriction or other distortion of competition within the relevant market shall be prohibited.” The lack of specific regulations on the format of these agreements makes it difficult to demonstrate participation in such action. Proving an elimination, restriction or violation of competition rule by entrepreneurs is challenging.

price fixing

What is a Cartel?

A cartel is an arrangement or practice agreed upon by at least two entities who are competitors. Its goal is to coordinate market actions or impact other key factors of competition.

It relates specifically to:

  • Setting or coordinating purchase or sale prices or other terms of commercial transactions. This includes intellectual property rights.
  • Determining production or sales levels.
  • Market and customer division.
  • Import or export restrictions.
  • Anti-competitive actions taken against other competitors.

As indicated by the Office of Competition and Consumer Protection [Polish: UOKiK], both the intention to influence competition and the effect of the agreement are illegal.

Cartel agreements pose a particular threat to the economy. Their secretive nature and long-lasting impact can lead to lasting distortions of competition. This also harms the economy and consumers.

Types of Price Fixing

Price Fixing of Horizontal NaturePrice Fixing of Vertical Nature
An agreement made between entrepreneurs operating in the same market segment. Typically also within the same industry.An agreement between indirectly related entities that influence each other’s interests.
The type of price fixing

According to the judgment of the Court of Competition and Consumer Protection dated 24 March 2004, case number XVII Ama 40/02, for establishing a violation of Article 6(1)(1) of the Act of 16 February 2007 on Competition and Consumer Protection, it is not significant whether competition has been restricted or eliminated. The very goal of actions can prove the illegality of the agreement.

Art. 106 of the Competition and Consumer Protection Act of 16 February 2007 defines the legal consequences of price fixing. Pursuant to it, the President of the UOKiK can impose a fine on an entrepreneur. Its amount cannot exceed 10% of the turnover achieved in the preceding financial year. This applies if an entrepreneur, even inadvertently, violates the rule in Article 6 of the Act.

Superiors can also be liable if they create a situation where their subordinates intentionally pursue goals related to illegal price fixing.

Do you suspect that you might be a victim of price-fixing?

Contact our experts for advice. We will analyze your case and propose the best strategy for you.

Truck Dealers’ Cartel

In 2016, the European Commission issued a decision about a case “AT.39824 – Trucks.” It found that manufacturers of trucks: MAN, Daimler/Mercedes, Fiat/Chrysler, Iveco, Volvo/Renault, PACCAR/DAF were involved in a price-fixing cartel. This occurred between 1997 and 2011. They jointly set inflated gross prices for the vehicles.

There was a possibility to claim compensation until 27 June 2020.

price fixing

Coal Sales and Price Fixing – the Atex Case

In UOKiK proceedings against Atex company, it was found that Atex’s contractors were obligated to sell fuel specified in the cooperation agreement’s annexe at predetermined prices. The contractor had no right to change the prices of these goods.

For practices that restrict competition, the President of UOKiK imposed a fine. The amount was nearly 2.5 million PLN.

Sale of monitoring and Price Fixing – the Dahua Case

Since 2016, Dahua Technology Poland has been influencing the pricing policies of distributors.

The company established minimum prices by:

  • Sending price lists to contractors. They were not allowed to sell products below the settled amount,
  • Providing information to its contractors about the maximum discounts they could offer,
  • Imposing fixed prices on distributors,
  • setting rates for promotions organized by them.

In 2024, the Office of Competition and Consumer Protection imposed fines totaling 37.01 million PLN. This included 22.19 million PLN for Dahua Technology Poland. Six cooperating companies were also fined.

Price Fixing – Leniency Procedure

Entrepreneurs participating in a cartel have a chance to avoid punishment. To achieve this, they must cooperate with the Office of Competition and Consumer Protection. This means they must act independently of other cartel participants. In exchange for evidence confirming the existence of an unlawful agreement, UOKiK refrains from imposing a fine or reduces it. This solution stems from Poland’s leniency program, in effect since 1 May 2004.

price fixing

Compensation for Price Fixing

Under the Act of 21 April 2017, on claims for damages from competition law violations, affected entrepreneurs have two options for proceeding.

Firstly, the affected entrepreneur can appeal to the President of the UOKiK. After obtaining a final decision, they can then seek compensation from the court. In this case, the court is bound by the findings of the President of UOKiK on the violation of competition law. The second option is to bring a lawsuit directly to the court.

What is important, the affected entrepreneur can claim compensation from all companies involved in the price-fixing procedure. Even if the entity only had a contract with one of them.

The limitation period for claims for damages of the violation of competition law is 5 years. The period does not commence until the violation ceases.

Price Fixing – Summary

Price-fixing conspiracies pose a serious threat to competition in the market. Companies that engage in price-fixing schemes restrict the market and eliminate competition. This results in higher prices for consumers Furthermore, price-fixing agreements are illegal. They lead to severe sanctions for companies and their management.

If you find the above topic interesting and want to learn more details, feel free to contact us! Our legal experts are ready to answer your questions.

FAQ – Questions and Answers about: Price Fixing

What is Price Fixing?

A price fixing procedure is an agreement between companies that aims at controlling or setting prices. It serves to restrict or eliminate competition in the market.

Why is price fixing illegal?

Price fixing disrupts competition, leading to higher prices for consumers and hindering innovation. It contradicts antitrust laws.

What are the consequences of price fixing?

Consequences include financial penalties and damage to reputation. There is also the possibility of criminal proceedings against individuals involved.

How to recognize a price fixing procedure?

Signs of a price-fixing are e.g. sudden price increases within an industry or unnatural, stable prices among competitors.

What are examples of price fixing procedure?

Examples include price agreements among manufacturers or subcontractors. Also setting profit margins, or dividing a market qualifies.

How to report suspicion of a price fixing procedure?

In Poland, reports can be made to the UOKiK, which investigates anti-competitive practices.

What are the differences between price fixing legal market practices?

Legal market practices involve competitive price setting by the market. Price fixing procedure aims to control prices.

What are the effects of the price fixing procedure on consumers?

Consumers pay higher prices for products and services. They have reduced choices, and experience lower quality due to lack of competition.

Is price fixing procedure common?

Although not very common, price-fixing occurs in various sectors of the economy. Regulatory authorities continuously monitor the market to fight it.

Are all forms of price fixing procedure prohibited?

Yes, all forms of price fixing procedure are illegal, regardless of the industry or scale.

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