What is meant by "price fixing" in commodities trading?

Price fixing in commodities trading refers to an illegal arrangement where parties collude to set prices at a predetermined level, rather than allowing market forces to determine them. This practice undermines free competition and can lead to inflated prices, harming consumers and disrupting market equilibrium. Price fixing is typically orchestrated by producers or suppliers who agree not to compete on price, thereby stabilizing or elevating the price of a commodity above what it would be in a competitive market environment.

In stark contrast, other options describe legitimate practices that are either regulatory measures or methods that comply with competitive standards. For instance, establishing a legal strategy to standardize prices or agreements to maintain competitive pricing does not connote collusion or price manipulation. Additionally, pricing based on consumer surveys reflects market research and consumer behavior, which are legal and ethical pricing strategies rather than clandestine, illegal actions. Understanding these distinctions is crucial for recognizing the implications of price fixing within the commodities market and its legality under competition laws.