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Competitors cooperating could be a form of unfair competition

Aug 16, 2023 | Uncategorized

Most marketplaces can support numerous businesses operating within the same niche. Even a small community may have enough work to support two or more plumbers or electricians, for example. With that said, those starting a new business often invest quite a bit of time into research about who will compete with them and how much demand there is on the local market. Unfortunately, such research may not give someone an honest idea of their economic opportunities because the other companies operating in the same industry might engage in unethical and even illegal business practices.

Unfair competition is a serious concern for those trying to start and run a successful organization. One of the most damaging forms of unfair competition involves competitors working with one another to push someone else out of the local market.

Competitors might attempt to manipulate the market

If established businesses resent a newcomer reducing their market share or influencing customer expectations, they might decide to work with one another to diminish the opportunities for the new competition. One of the common and illegal ways that businesses try to undermine a competitor’s operation would involve setting prices with other businesses in the same industry.

This practice, also known as price fixing, can make it impossible for one business to compete with others in the industry. Competitors might even set the prices that they charge for certain goods or services below what providing them costs in the hopes of driving a competitor out of business. Organizations often cannot compete when every other business in the same niche undercuts their pricing.

Unfair competition could be actionable

Provided that a business owner can demonstrate that competitors have all started using the same pricing or that they held clandestine meetings to reach such arrangements, it may be possible for someone harmed by unfair competition to take legal action. Pursuing a lawsuit against those engaged in unfair business practices can compensate an organization for its losses and prevent future misconduct.

Obviously, proving that unfair competition occurred will require an investigation into the actions of competitors and how they may have coordinated such efforts in an attempt to unfairly compete with a new business in their field. Recognizing the warning signs of different forms of unfair competition can be an important step for those hoping to fight back against such misconduct and preserve what they have invested in a company that they may have recently started.