Price Fixing Essay

This essay has a total of 322 words and 2 pages.

Price Fixing

Price fixing is defined as, "an arrangement in which two firms coordinate their pricing
decisions." (O'Sullivan & Sheffrin, 2003). The price fixing case I chose was regarding
Brown and Toland Medical Group. The company is a multi-specialty, for-profit San
Francisco-based independent physicians' association (Rauber, 2004).

Brown and Toland Medical Group was charged by the FTC with violating federal antitrust
laws by fixing prices and other terms under which it would contract with insurance
companies for preferred provider organization (PPO) enrollees. The FTC contends that the
company had physicians agree on prices and terms they would enter contracts with heath
plans or third-party payers. The company also allegedly told doctors to terminate any
pre-existing contracts. Then they asked others to join in their price-fixing agreement.
This would raise prices for physician services in their home town San Francisco.

The FTC proposed a consent agreement that bars Brown and Toland from:

• Negotiating with any payer on behalf of any physician.
• Dealing or refusing to deal with any payer based on price or other terms
• Jointly determining price or other terms upon which any physician deals with payers

Another stipulation of the consent agreement is that Brown & Toland to notify the FTC at
least 60 days before entering into any arrangement with physicians or contacting any
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