Difference between Agreement and Concerted Practice

Agreement and concerted practice are terms that are commonly used in competition law. Both of these terms refer to the actions taken by companies to coordinate their behavior in the market. However, they are different concepts, and understanding the difference between them is crucial for businesses to avoid breaching competition law.

Agreement is a formal and explicit arrangement between two or more companies to coordinate their behavior in the market. This may involve fixing prices, allocating markets, or sharing information about their products and services. An agreement can be in the form of a written contract, an oral understanding, or even a nod and a wink.

On the other hand, concerted practice refers to a situation where companies engage in a coordinated behavior in the market without having a formal agreement in place. This may involve a series of actions taken by companies that have a similar effect on the market, such as matching each other`s prices or reducing their output.

The key difference between agreement and concerted practice is that the former involves a formal and explicit arrangement, while the latter involves a more informal and indirect coordination of behavior. In both cases, the goal is to reduce competition in the market, but the legal implications of each situation are different.

In terms of competition law, an agreement between companies that constitutes a breach of competition law is illegal. This includes agreements to fix prices, limit production, or share markets. Companies found to have entered into an illegal agreement can face significant fines and other penalties.

Concerted practices are also prohibited under competition law, but they are more difficult to identify and prove. To be deemed a concerted practice, there must be evidence that the companies involved have engaged in a coordinated behavior that is anti-competitive. This may include evidence of a tacit understanding between the companies, or evidence of signals or messages that the companies have sent to each other.

In conclusion, the difference between agreement and concerted practice is important for companies to understand. While both involve coordination of behavior in the market, an agreement is a formal and explicit arrangement between companies, while concerted practice is an informal and indirect coordination of behavior. Companies that engage in either of these practices may be in breach of competition law and may face significant penalties. As a professional, we must ensure that content about competition laws is accurate and informative to help businesses make informed decisions.