Collusion Versus Collaboration: Getting It Right

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Neha Georgie, Nov 11, 2014

Collaboration between firms in an industry can be beneficial to both firms and consumers in a market, insofar as firms are indeed only co-operating rather than colluding on anticompetitive outcomes. There is a fine line between the two but firms in industries where there are real benefits to be reaped from co-operation stand to make significant gains from knowing where that line is drawn. They could lose out disproportionately by not erring on the side of caution, whether knowingly or unknowingly.

There exists an array of collaborative practices that firms might engage in. Some of these are illegal per se whereas others can be employed legally, should firms choose to. What are the other forms of co-operation and when are they permissible? When might an industry, or a set of firms, be punishable by law for their collaborative actions? The answers to these questions may vary by sector and jurisdiction, but there are some general principles to be considered by firms, associations of firms, and competition authorities in order to make collaboration more of a success.