The European Commission recently fined Nintendo nearly $150 million after it was determined that the video game company had colluded with European distributors to fix prices. Why is price fixing not considered a good practice? What are different kinds of price fixings?
Nintendo paid fine due to the fact that it is considered illegal to set similar prices for the products by the representative of the companies. Price fixings is an anticompetitive and undesirable practice that companies try to ensure the high prices for their product as compared to independent functioning of the market. Price fixing is of two types viz. horizontal and vertical. Formal involve competitors that make and market same products keep the prices high such as airlines. While later, manufacturer and retailer or wholesaler conspires to keep the prices high. Nintendo followed later that is vertical price fixing as it colludes with the European distributor to fix the prices.