The Meaning of ``Agreement'' under the Sherman Act: Thoughts from the ``Facilitating Practices'' Experience

The Meaning of ``Agreement'' under the Sherman Act: Thoughts from the ``Facilitating Practices''... 114 GEORGE A. HAY communications that had been at the heart of the original conspiracy. Vigorous price competition apparently prevailed in the industry from 1960 into 1963. By 1962, Allis-Chalmers had withdrawn from the market but there was still substantial overcapacity and prices continued to decline. Relatively few sales are made in any year and the pressure to obtain any given order was substantial. Moreover, the product was not homogeneous and, although price books were used, there was little adherence to published prices and considerable discounting occurred on particular projects. However, in 1963 there was an important set of developments that, in the Department’s opinion, resulted in a sudden and dramatic reduction in the degree of competition. Specifically, in May 1963, GE announced a new pricing policy which featured GE’s intention to adhere to published prices on all future transactions. The revised policy had a number of elements designed to facilitate the success of the new pol- icy. A key element was a revised price book which contained simplified formulas and procedures for determining the book price of any given turbine generator and a published multiplier to be applied to book prices at any given time so as to http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Industrial Organization Springer Journals

The Meaning of ``Agreement'' under the Sherman Act: Thoughts from the ``Facilitating Practices'' Experience

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Publisher
Kluwer Academic Publishers
Copyright
Copyright © 2000 by Kluwer Academic Publishers
Subject
Economics; Industrial Organization; Microeconomics
ISSN
0889-938X
eISSN
1573-7160
D.O.I.
10.1023/A:1007875328337
Publisher site
See Article on Publisher Site

Abstract

114 GEORGE A. HAY communications that had been at the heart of the original conspiracy. Vigorous price competition apparently prevailed in the industry from 1960 into 1963. By 1962, Allis-Chalmers had withdrawn from the market but there was still substantial overcapacity and prices continued to decline. Relatively few sales are made in any year and the pressure to obtain any given order was substantial. Moreover, the product was not homogeneous and, although price books were used, there was little adherence to published prices and considerable discounting occurred on particular projects. However, in 1963 there was an important set of developments that, in the Department’s opinion, resulted in a sudden and dramatic reduction in the degree of competition. Specifically, in May 1963, GE announced a new pricing policy which featured GE’s intention to adhere to published prices on all future transactions. The revised policy had a number of elements designed to facilitate the success of the new pol- icy. A key element was a revised price book which contained simplified formulas and procedures for determining the book price of any given turbine generator and a published multiplier to be applied to book prices at any given time so as to

Journal

Review of Industrial OrganizationSpringer Journals

Published: Oct 16, 2004

References

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