What does the term 'price fixing' refer to in business legislation?

The term 'price fixing' in business legislation refers specifically to the practice of colluding among competitors to set prices at a predetermined level, rather than allowing market forces to determine the price. This kind of behavior is illegal in many jurisdictions because it disrupts the competitive nature of the market, preventing free competition and potentially leading to higher prices for consumers.

When businesses engage in price fixing, they may agree to raise, lower, or maintain prices in a way that is not based on their individual business decisions, but rather through coordination with their competitors. This can eliminate price competition, which is often beneficial for consumers who rely on competition to get better prices and services.

Other options, while they involve pricing, do not accurately describe the concept of price fixing. For example, setting fixed prices for insurance policies does not imply collusion among competitors; it can be a legitimate business practice. Establishing discounts for bulk purchasing is a common pricing strategy that encourages larger purchases without collusion. Finally, adjusting prices based on market trends reflects a responsive and competitive strategy that allows businesses to adapt to supply and demand dynamics, rather than coordinated actions among competitors.