Policy Review of Bread Price Fixing Paper Example

Collusive arrangements play an important role in setting the price of the bread, the bread makers agree on the price at which to sell the bread at wholesale. Bread makers have been accused in the past of colluding in order to earn more profit by hiking the price at which they sell bread. The producers agree to sell the bread at one common price in order to eliminate competition that would make them lower their prices for the bread to be purchased by the competitors. The implementation of the price policy was opposed by the body regulating competition.

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The implementation of competition law resulted in a fine of the primary bread making companies discourage them from creating a standard price that is not favorable to the consumers (Elkaim, 2017). The competition watchdog is mandated to ensure price fixing is eliminated to protect the interests of the public. Competition needs to be encouraged to make the bread making companies offer their bread to consumers at competitive prices that are not regulated. Bread making companies formed a cartel to control and fix the price of commodities.

The competition regulator was being accused of raising the price of commodities hence there was a need to regulate bread making companies that wanted to make the market a monopoly where they could control it (STRAUSS, 2018). An investigation was done to determine how the cartel price control affected the market and the consumers. The action taken was dismantling the cartel by ensuring that their mission of controlling the price is not active. Allowing marketing forces to determine the price makes the bread makers make quality bread for marketing purposes which is a benefit to the customer.

The problem of the bread price fixing can be solved by the government using Competition Act and Immunity (Canada, 2018). The Competition Act guides the conduct of businesses in Canada. The Act is applicable in the case of the seven Canadian companies that were conspiring to increase the prices of the bread. The agreement for the companies was to increase the prices of the commodity for 14 years. The Competition Act protects the consumers by ensuring that they get the products at a competitive prices and that there are several products to choose from.

Immunity and Leniency Programs are some of the tools for eliminating unlawful company conducts that violate the provisions contained in the Competition Act (Canada, 2018). Through these programs the Canadian government is able to detect, investigate and prosecute those engaging in unlawful conduct. The immunity program protects those who provides information about a case that has not been detected to the Public Prosecution Service of Canada. When a party collaborates with the Bureau to investigate and prosecute the companies engaging in unlawful conduct it qualifies to receive immunity.

The other program that the Canadian government can use the case of the bread price fixing is leniency program (Canada, 2018). The program complements the immunity program to help those who have breached the Competition Act and are not qualified to receive the immunity program. However, for a company to be granted leniency they have to accept that they are guilty of the offense as stipulated in the Competition Act. These two programs are effective in dealing with unlawful conduct such as setting unreasonable prices for a product. These programs can be used by the government to entice companies to report company malpractices.

References

Canada, C. (2018). Immunity Program under the Competition Act - Competition Bureau Canada. Retrieved from https://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/04316.html

Elkaim, C. (2017). Bread price-fixing: Investigation into at least seven companies | CBC Radio. Retrieved from https://www.cbc.ca/radio/thecurrent/the-current-for-december-21-2017-1.4458465/bread-price-fixing-investigation-into-at-least-7-companies-1.4458469

STRAUSS, M. (2018). The group accused of bread price-fixing granted delay on a class-action suit. Retrieved from https://www.theglobeandmail.com/business/article-group-accused-of-bread-price-fixing-granted-delay-on-class-action-suit/