ACCA Applied Knowledge · Business and Technology · Political and legal factors affecting business
Two rival manufacturers privately agree to fix the selling price of their products at a high level. Which area of law is designed to prevent this behaviour?
Competition law is designed to prevent this. Agreeing prices between rivals is a cartel, which restricts competition and harms consumers through higher prices. Competition or anti-trust law prohibits such agreements, whereas health and safety, contract formation rules and data protection address different concerns.
- ACompetition lawCorrect
- BHealth and safety law
- CContract law on offer and acceptance
- DData protection law
Explanation
Price fixing between competitors is a cartel practice, which competition (anti-trust) law prohibits to protect consumers and fair markets. Health and safety and data protection law address other matters, and contract law does not prevent such agreements being unlawful.
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