2

I've been in a few niche online forums and chat rooms that specifically forbid their members from discussing anything about the rates they offer as contractors. Some claim it's price fixing and outright illegal, others that it's too gray of an area they just don't want to be anywhere near.

I can see where they're coming from: various descriptions of price fixing I can find on google seem to use broad strokes, suggesting any coordination intended to affect market value of a service amounts to the crime. But then I also see professionals talking about it on bigger social media platforms like Twitter, encouraging their peers to price themselves higher (apparently it's common for newer software contractors in particular to undervalue their services and underestimate their costs). These comments, often turning into extended conversations mentioning specific numbers, don't seem to have any problems.

Where between explicit market manipulation and well-meaning mentorship is the line drawn?

3

Under Section 1 of the Sherman Act, there has to be an agreement for there to be price fixing. If the parties do not agree to engage in price-fixing or other anti-competitive behavior, there is no violation.

There does not needed to be a written, explicit contract memorializing the agreement, but there does need to be more than just encouragement to change prices. Telling one person to charge more isn't price-fixing, because the person making the suggestion could then just leave his own prices in place and enjoy the competitive advantage.

But if that person were to say, "We should raise our prices," and then they both did, you'd probably have a pretty good Sherman Act case.

  • Details could be helpful, because what constitutes an agreement? If one person tweets "you should charge more for your services" and the other person tweets "yes, I will do that, good idea" in reply, is their agreement equivalent to price fixing? – talrnu Oct 24 '18 at 15:46
  • Sorry, I hit submit before I finished. – bdb484 Oct 24 '18 at 15:47
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    OK. I think that should give you a better idea of where the line is, though you may not be surprised to learn that the courts have not yet drawn that line perfectly clearly. – bdb484 Oct 24 '18 at 15:52
  • I should also note, the implication is that the person encouraging increased prices is already charging more than those they're encouraging, so the encouragement is effectively "charge as much as I do" - not quite the same as increasing prices simultaneously, but not completely dissimilar either. Probably why the courts have been as vague as you suggest. – talrnu Oct 24 '18 at 16:17
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    I just came across an article on "signaling" that offers a lot more detail on how the courts and the FTC have been approaching these kinds of incidents. You may want to check it out: jonesday.com/files/Publication/… – bdb484 Oct 24 '18 at 16:58

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