The processes of setting and communicating prices are two of the most fundamental roles of a business. Price affects a business’s sales, revenue, investment returns, and ultimately profit. As a result, the term “price fixing” has a strong negative connotation, and deservedly so. Restrictions on price competition represent actual threats to the economy, and they carry the possibility of harsh penalties. However, the term sometimes may be misused in reference to pro-competitive, legal conduct, which actually may be beneficial for businesses and consumers.
In a recent decision, an administrative law judge dismissed three illegal price-fixing charges brought against McWane, Inc. by the Federal Trade Commission, but upheld four charges alleging that it illegally excluded competitors from the market.
The privately-owned McWane, Inc. is the nation’s largest manufacturer of iron pipe and other products used in water distribution and wastewater treatment. In January 2012, the FTC Complaint accused McWane of orchestrating a complex scheme in which it worked with competitors Star Pipe Products Limited and Sigma Corporation to raise and stabilize prices. The FTC also alleged that a trade group was created to assist in this illegal scheme by serving as a clearinghouse through which the companies could exchange pricing information.