Conscious parallelism

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Competition law
Basic concepts
History of competition law Monopoly Coercive monopoly Natural monopoly Barriers to entry Market power SSNIP test Relevant market Merger control
Anti-competitive practices
Monopolization Collusion Formation of cartels Price fixing Bid rigging Product bundling and tying Refusal to deal Group boycott Exclusive dealing Dividing territories Conscious parallelism Predatory pricing Misuse of patents and copyrights
Laws and doctrines
United States Sherman Antitrust Act Clayton Antitrust Act Robinson-Patman Act FTC Act Hart-Scott-Rodino Act Merger guidelines Essential facilities doctrine Noerr-Pennington doctrine Parker immunity doctrine Rule of reason Europe UK competition law Irish competition law Australia Trade Practices Act 1974
Enforcement authorities and organizations
International Competition Network List of competition regulators
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Conscious parallelism is a term used in competition law to describe price-fixing between competitors in an oligopoly that occurs without an actual spoken agreement between the parties. Instead, one competitor will take the lead in raising prices. The others will then follow suit, raising their prices by the same amount, with the unspoken mutual understanding that all will reap greater profits from the higher prices so long as none attempts to undercut the others.

This practice, like most anticompetitive practices, can be harmful to consumers who, if the market power of the firm is used, can be forced to pay monopoly prices for goods that should be selling for only a little more than the cost of production. Nevertheless, it is very hard to prosecute because it occurs without producing any evidence of collusion between the competitors.

The term has also been used to describe industrywide assumption of terms other than price. For example, all competitors in an industry might make only long-term leases of products such as heavy machinery, leaving lessors with no opportunity to make a short-term lease of that product from any competitor.

See also: Price leadership