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Fashion Industry Antitrust Issues

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Price Fixing

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Price fixing is when competitors agree on pricing rather than competing. In fashion, if multiple retailers agree on a fixed price for a particular style of shoes, they are engaging in price fixing.

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Anti-competitive Agreements

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Anti-competitive agreements are deals between businesses that prevent, restrict or distort competition. In fashion, this could be an agreement between designers not to poach each other's employees.

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Tying

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Tying occurs when a product is sold with the condition that the buyer also purchases a different product. In the fashion industry, a designer could require that a retailer buying their new line also stocks an unpopular product.

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Merger

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A merger is the combination of two or more companies into one. In fashion, when a large conglomerate buys a small designer label, they are merging companies, possibly affecting competition.

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Horizontal Integration

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Horizontal integration occurs when a company acquires or merges with a competitor operating at the same level of the supply chain. When one fashion retailer buys another, this is horizontal integration.

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Oligopoly

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An oligopoly occurs when a few companies dominate a market. In fashion, this can happen when a handful of brands control most of the high-fashion market, hindering new competitors.

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Exclusive Supply Agreements

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Exclusive supply agreements occur when a supplier sells its products to only one retailer. For instance, a fabric producer might enter into an agreement to sell a unique textile only to a particular fashion house.

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Retail Price Maintenance

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Retail price maintenance is when a manufacturer sets the price at which a retailer must sell its product. For example, a luxury brand may dictate the minimum retail price of their bags to maintain a high-end image.

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Monopoly

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A monopoly exists when a company has exclusive control over a market for goods or services, leading to limited competition. In fashion, if a single brand controls the entire supply chain for luxury handbags, it has a monopoly in that market.

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Market Allocation

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Market allocation happens when competitors agree to divide up markets among themselves. For example, if two fashion brands agree that one will only sell in Europe and the other only in North America, they are dividing the market.

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Vertical Integration

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Vertical integration is when a company controls multiple stages of the supply chain. If a fashion brand owns the farms that produce its wool, the factories that make its garments, and the stores that sell them, it is vertically integrated.

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Exclusive Dealing

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Exclusive dealing is when a supplier requires that a retailer only purchase from them. In fashion, a clothing manufacturer might insist that a boutique sells only their brand.

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Group Boycott

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A group boycott is a collective agreement by competitors to exclude a party from business dealings. In fashion, if several retailers decide not to stock a brand due to its unethical practices, this could be seen as a group boycott.

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Predatory Pricing

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Predatory pricing is when a company sets prices below cost to drive competitors out of the market. A large fashion retailer could significantly reduce prices on clothing to outcompete smaller boutiques, planning to raise prices later.

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Barriers to Entry

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Barriers to entry are obstacles that make it difficult for new competitors to enter the market. In fashion, the high cost of branding and market saturation can be significant barriers for new designers.

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