Legal Definitions - conscious parallelism

Conscious parallelism describes a situation where businesses in the same market independently make similar decisions, often regarding pricing, production, or service offerings, because they are aware of and reacting to their competitors' actions. Unlike illegal price-fixing, which involves a direct agreement or conspiracy between competitors, conscious parallelism occurs without any communication or collusion. Businesses observe what their rivals are doing and adjust their own strategies to remain competitive or profitable. While this behavior is generally not illegal on its own, critics argue it can lead to market outcomes similar to those of illegal collusion. If other evidence of an unlawful agreement is present, conscious parallelism can be a factor in proving an antitrust violation.

Here are a few examples to illustrate conscious parallelism:

• A major airline announces a new baggage fee structure, and within weeks, two other competing airlines introduce nearly identical fees.This demonstrates conscious parallelism because each airline, without communicating with the others, observed a competitor's move and independently decided to implement a similar policy to maintain competitive balance or profitability. Their actions parallel each other due to market awareness, not conspiracy.
• In a city with only a few large internet service providers (ISPs), one provider increases the monthly price for its premium broadband package. Shortly after, the other dominant ISPs in the same area also raise their prices for comparable packages by a similar amount.Here, each ISP is consciously aware of the pricing strategies of its competitors. When one raises prices, the others follow suit independently, recognizing that they can do so without losing significant market share and potentially increasing their own profits, all without any direct agreement or discussion.
• Several leading manufacturers of a specific type of consumer electronic device simultaneously launch their new models with very similar core features and price points, despite having no direct contact or joint development.This illustrates conscious parallelism as each manufacturer, through market research and observation of competitors' product development cycles and anticipated pricing, independently arrived at similar product and pricing strategies to compete effectively in the market.