When government sets prices: what can history teach us?

Abstract

Agreements on prices by undertakings selling competing products are regarded as one of the most serious competition law infringements. This article considers what happens when government sets the prices at which those competing firms can sell their products. This article firstly examines the extensive use of government price controls in World War II. It then reviews early cases in the Restrictive Practices Court that considered the public interest (if any) in price stability. This article then touches on EU case law on when government involvement in price setting is acceptable or may provide some defence for undertakings and more recent EU legislation imposing price controls. Finally, the article draws the arguments for and against price fixing together to show what we can learn from the history of price controls. Current economic conditions and the range of solutions available to government make such a historical review both valuable and timely.