Definition of plus factors

The term plus factors refers to economic circumstantial evidence of collusion above and beyond the parallel movement of prices by firms in an industry.  Plus factors are the economic criteria that can assist with the diagnosis of collusion.

Plus factors can be differentiated in terms of their strength.  When a plus factor delivers a strong inference of collusion, that plus factor is referred to as a super-plus factor. For example, if firms engage in interfirm transactions that are transfers of resources and are largely void of productive noncollusive motivations, that conduct would be a super-plus factor.

If collusive firms view super-plus factors as something that will be used by courts to draw a strong inference of explicit collusion, then colluding firms will try to avoid creating super-plus factors. However, avoiding super-plus factors can greatly encumber the profitability and stability of a cartel.

Example

Prosecuted cartels in vitamins and organic peroxides were found to have arranged periodic “true-up,” which were purchases between cartel firms to rectify differences in realised cartel market shares from the agreed-to levels. Such transactions would be viewed as plus factors. [1]

See

Article - Double trouble for telecoms companies


 

FT Articles & Analysis

No articles are associated with this term