Levelling The Playing Field With

A is referred to as a horizontal agreement. For example, an agreement between two manufacturers of bricks.The economic basis for competition law concern of these horizontal agreements is founded on the recognition that profit-maximising competitors may have an incentive to co-ordinate their behaviour rather than compete vigorously with one another.

Horizontal agreements therefore have the potential effect of substantially preventing or lessening competition in a market. If firms behave collusively, they can indirectly act in the same manner as a monopolist, and are accordingly able to set higher prices or reduce output and therefore earn undue higher profits. If firms behave in this manner, consumers would generally suffer.