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Question 260

First National is developing a consumer checking account that can access a line of credit. This is the first time the bank has ever had such a product, although this type of credit facility has been popular with other banks in town. To determine what interest rate to charge on this account, an officer of First National called some of his friends at other local banks offering this type of credit and asked several questions, including the interest rate charged on this type of account and what internal factors the banks use to set the rate. After obtaining this information, First National determines that it could charge approximately 2 percent more than it originally planned. Is there anything wrong with this course of action?

Yes. Communicating with competitors for purposes of setting prices is wrong.

No. Communication itself is never wrong regardless of the subject matter.

Yes. The bank should have disguised its identity in calling its competitors.

No. The bank could probably have determined the prices eventually without calling the banks directly.

Correct Answer: A

Communicating with competitors for the purposes of setting prices is wrong because it can lead to anticompetitive behavior, such as price-fixing or collusion. This behavior is generally prohibited under antitrust laws as it harms consumers by reducing competition and leading to potentially higher prices.

Discussion

Cam22Option: A

Engaging in communications with competitors for the purpose of setting prices or exchanging competitively sensitive information can be considered anticompetitive behavior and may violate antitrust laws. This behavior can lead to collusion or price-fixing, which harms consumers and stifles competition in the marketplace.