Price Transparency

Although enhanced price transparency will generally increase competition to the benefit of consumers, it can have the opposite effect in some special situations. A negative impact is especially likely in markets already prone to anti-competitive coordination. In such markets, competition authorities should be suspicious of competitors exchanging price data, or engaging in any other practice that could help focus anti-competitive arrangements or help competitors more than customers to react to price changes. They should also be wary of exchanges of non-binding future prices. A number of key factors need to be considered in assessing whether increased price transparency might raise the probability of anticompetitive co-ordination. That includes having a look at meeting competition and most favored nation clauses, and the practice of base point pricing. The paper by the Secretariat also examines price transparency as regards information exchanges within trade associations, price advertisements, and mandatory price transparency in public procurement markets. It closes with a short list of questions competition authorities might wish to keep in mind when investigating the effects of price transparency. This document comprises proceedings in the original languages of a Roundtable on Price Transparency which was held by the Committee on Competition Law and Policy in June 2001.