What does 'price fixing' involve in terms of competition law?

Price fixing involves businesses conspiring to set the same prices for their products or services rather than allowing competition to dictate pricing. This practice is a violation of competition law because it eliminates the normal supply and demand influences on pricing, leading to artificially high prices that harm consumers and stifle market competition.

When businesses collaborate to set prices, they limit the ability of the market to operate freely, which goes against the principles of healthy competition. By fixing prices, these businesses can ensure they maximize their profits at the cost of consumers, leading to a scenario where competition is undermined and market efficiency is compromised. This is why option B accurately captures the essence of what price fixing entails within the context of competition law.

The other options relate to pricing strategies within competitive markets but do not involve collusion. Offering lower prices than competitors and reducing prices to increase market share can be seen as competitive pricing strategies that benefit consumers, whereas adjusting prices based on consumer demand reflects a typical response to market conditions that is not inherently collaborative. These approaches do not violate competition laws as they operate within the framework of competition rather than undermining it.