Legal Definitions - collusion

Collusion refers to a secret agreement or understanding between two or more parties to deceive, defraud, or mislead another party, or to achieve an illegal or improper purpose. It often involves a conspiracy to manipulate outcomes, gain an unfair advantage, or circumvent rules or laws.

In the context of antitrust law, collusion typically involves competitors secretly agreeing to limit competition, such as by fixing prices, dividing markets, or restricting the supply of goods or services. This type of collusion is illegal because it harms consumers by reducing choices and artificially inflating prices.

Here are some examples illustrating collusion:

• Example 1 (General Fraud): Imagine two construction companies submitting bids for a new city park project. Instead of competing genuinely, the owners of Company A and Company B secretly meet and agree that Company A will submit a very high, non-competitive bid, ensuring Company B wins the contract at a slightly lower, but still inflated, price. They might then secretly share a portion of the profits from the overpriced contract.

  How it illustrates collusion: This is collusion because the two companies formed a secret agreement to manipulate the bidding process, deceiving the city into paying more than a fair market price and gaining an unfair advantage over other potential bidders.

• Example 2 (Antitrust - Market Division): Several major technology companies that produce similar software products secretly agree to divide the global market among themselves. Company X agrees to only sell its software in North America, Company Y in Europe, and Company Z in Asia, thereby eliminating competition in each region and allowing them to charge higher prices without fear of being undercut.

  How it illustrates collusion: This demonstrates collusion in an antitrust context. Competitors (the technology companies) at the same market level secretly agreed to divide markets, which is an illegal act designed to reduce competition, limit consumer choice, and artificially inflate prices.

• Example 3 (Legal Proceedings): In a lawsuit where a former business partner is suing for a share of profits, the defendant (the remaining partner) and a key witness (an accountant who handled the business's books) secretly agree to alter financial records to minimize the reported profits. Their goal is to deceive the court and reduce the amount the former partner is awarded.

  How it illustrates collusion: This is collusion because parties involved in a legal proceeding (the defendant and the witness) formed a secret agreement to present false evidence to the court, aiming to achieve an outcome that is not based on truth and to defraud the plaintiff of their rightful claim.