Posted by: _____ September 17, 2014
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it is not as black and white as you think.
In us it is called price fixing or carteling. In every country there is a rule that how much profit one can make. I developed countries it is usually determined by the supply and demand, quality etc.
But sometime Big companies practice price fixing,in that case price is not controlled by supply and demand but manipulated by big companies for profit, artificially elevating price or artificially lowering the price to give a hard time to the competitor.
In US, generally, the antitrust laws require that each company establish prices and other terms on its own, without agreeing with a competitor. When consumers make choices about what products and services to buy, they expect that the price has been determined freely on the basis of supply and demand, not by an agreement among competitors. When competitors agree to restrict competition, the result is often higher prices. Accordingly, price fixing is a major concern of government antitrust enforcement.
so similar type of fixing has have happened in above case. they all agree to sell the items on elevated price.
In Nepal such type of cartelling/syndicate is everywhere. In transportation, in vegetable market and in real estate. Also in construction projects. If government wants to construct a building all big construction company agree with each other that they wont bid the project lower than certain amount. Say double the cost and they distribute the profit among each other. This type of companies wont allow new company to emerge, they kill start ups.
The situation is such that the ration for the police etc is also elevated and government pays almost 50% more than the market price.
Above Video indicates two possibilities.
1. This my be a general case of price fixing or
2. As that Rajbhandari guy indicated in the video tax evasion by wholesaler in such case what happens is
The wholesaler imports goods worth say 10 billion on that say government levies tax 10% so tax is 1 billion.
But if you declare that you have imported the goods worth only 5 billion then the tax is only 500 million, in this case you already made profit of 500 million.
But if you sell that goods to the retailer charging full price then government will catch you how ?
because you declared good is worth 5 billion but you but charged as if it was worth 10 billion.
so for the retailer the receipt as if the good was worth 5 billion but take cash as if it was 10 billion . So 50% of the money goes out of tax system.In this case the wholesaler or importer is evading the tax system.
Both cases is against the rule of civilized world. US fines different companis millions of dollars every year.
An agreement to restrict production, sales, or output is just as illegal as direct price fixing, because reducing the supply of a product or service drives up its price.
FYI
5 SEPTEMBER 2014
Samsung Electronics must pay a 46.5 billion won (US$45.4 million) fine in Europe for price fixing.
According to the AFP on Sept. 3, the E.U. levied fines worth €138 million (US$178 million) on companies involved in fixing the price of chips in smartphones and bank cards. Those companies include Philips with €20.1 million (US$26.0 million), Samsung with €35.1 million (US$45.4 million), and Infineon Technologies with the largest fine of €82.8 million (US$107 million).
It was ruled that these three firms exchanged information related to chip prices and discussed prices from Sept. 2003 to Sept. 2005.
In a statement, the European Commission said, "These companies fixed the price through bilateral contacts." Renesas Electronics, which also participated in price-fixing, was exempt from paying fines by exposing the collusion. Samsung cooperated with the E.U. in the investigation, and its fines were reduced by 30 percent as a result.
- See more at: http://www.businesskorea.co.kr/article/6243/penalty-bombing-eu-fines-samsung-47-billion-won-price-fixing#sthash.hKXlXViA.dpuf
Price fixing is a crime.
In us it is called price fixing or carteling. In every country there is a rule that how much profit one can make. I developed countries it is usually determined by the supply and demand, quality etc.
But sometime Big companies practice price fixing,in that case price is not controlled by supply and demand but manipulated by big companies for profit, artificially elevating price or artificially lowering the price to give a hard time to the competitor.
In US, generally, the antitrust laws require that each company establish prices and other terms on its own, without agreeing with a competitor. When consumers make choices about what products and services to buy, they expect that the price has been determined freely on the basis of supply and demand, not by an agreement among competitors. When competitors agree to restrict competition, the result is often higher prices. Accordingly, price fixing is a major concern of government antitrust enforcement.
so similar type of fixing has have happened in above case. they all agree to sell the items on elevated price.
In Nepal such type of cartelling/syndicate is everywhere. In transportation, in vegetable market and in real estate. Also in construction projects. If government wants to construct a building all big construction company agree with each other that they wont bid the project lower than certain amount. Say double the cost and they distribute the profit among each other. This type of companies wont allow new company to emerge, they kill start ups.
The situation is such that the ration for the police etc is also elevated and government pays almost 50% more than the market price.
Above Video indicates two possibilities.
1. This my be a general case of price fixing or
2. As that Rajbhandari guy indicated in the video tax evasion by wholesaler in such case what happens is
The wholesaler imports goods worth say 10 billion on that say government levies tax 10% so tax is 1 billion.
But if you declare that you have imported the goods worth only 5 billion then the tax is only 500 million, in this case you already made profit of 500 million.
But if you sell that goods to the retailer charging full price then government will catch you how ?
because you declared good is worth 5 billion but you but charged as if it was worth 10 billion.
so for the retailer the receipt as if the good was worth 5 billion but take cash as if it was 10 billion . So 50% of the money goes out of tax system.In this case the wholesaler or importer is evading the tax system.
Both cases is against the rule of civilized world. US fines different companis millions of dollars every year.
An agreement to restrict production, sales, or output is just as illegal as direct price fixing, because reducing the supply of a product or service drives up its price.
FYI
5 SEPTEMBER 2014
Samsung Electronics must pay a 46.5 billion won (US$45.4 million) fine in Europe for price fixing.
According to the AFP on Sept. 3, the E.U. levied fines worth €138 million (US$178 million) on companies involved in fixing the price of chips in smartphones and bank cards. Those companies include Philips with €20.1 million (US$26.0 million), Samsung with €35.1 million (US$45.4 million), and Infineon Technologies with the largest fine of €82.8 million (US$107 million).
It was ruled that these three firms exchanged information related to chip prices and discussed prices from Sept. 2003 to Sept. 2005.
In a statement, the European Commission said, "These companies fixed the price through bilateral contacts." Renesas Electronics, which also participated in price-fixing, was exempt from paying fines by exposing the collusion. Samsung cooperated with the E.U. in the investigation, and its fines were reduced by 30 percent as a result.
- See more at: http://www.businesskorea.co.kr/article/6243/penalty-bombing-eu-fines-samsung-47-billion-won-price-fixing#sthash.hKXlXViA.dpuf
Price fixing is a crime.