Is the Same Price Always Fair? Consumer Attitudes and Behavior towards Reporting Suspected Price-Fixing Activities in Hong Kong | FDS (Faculty Development Scheme) of RGC (Research Grants Council) | HK$452,444 | Reference No.: UGC/FDS24/B07/19

Price-fixing is an issue of enormous economic significance influencing global sales worth of $16.6 trillion USD dollars, making products and services more expensive for consumers (Connor, 2008, Levenstein and Suslow, 2006). As an attempt to tackle this problem in Hong Kong, the Competition Ordinance came into full effect on 15 December 2015 criminalizing price-fixing (Competition Commission 2015). Problematically, in the most advanced economies, illicit price-fixing conspiracies between competitors have continued to persist despite similar competition laws, often involving some of the largest and most respected companies (Connor 2008; Levenstein and Suslow 2006; Pressey et al. 2014).

Hong Kong government’s strategy to enforce competition laws relies extensively upon Hong Kong people voluntarily reporting suspected price-fixing activities to authorities. By receiving reports from the public of suspected price-fixing cases, Competition Commission can enforce the competition laws more efficiently. Problematically, there are no previous empirical marketing studies regarding consumer behaviour in relation to price-fixing, including how and why consumers may report suspected price-fixing cases to the government. Also, we have little knowledge regarding consumers’ ability to detect price-fixing and consumer perception of price fairness, in relation to price-fixing. This gap in knowledge is surprising, as price-fixing relates directly to a core marketing mix component, pricing (Borden 1964). Also, price-fixing relates directly to consumer perception of price unfairness, which is a prominent area of consumer marketing research (e.g. Kahneman et al., 1986; Campbell, 1999; Xia et al., 2004, Bolton et al., 2003). Overall, price-fixing has a direct adverse influence on consumer well-being by raising the price of products and services, while reducing choice available to consumers (Levenstein and Suslow 2006).

Addressing this gap in literature, the present study is the first empirical study investigating consumer behaviour in relation to price-fixing. In line with Hong Kong government strategy, this research seeks to find more effective ways to nudge consumers to report suspected price-fixing situations. The planned intervention is based on 3 separate research methods, combining an experiment, a survey and a qualitative focus group investigation. Our experiment will seek to understand causality in relation to the consumer’s reporting of price-fixing, including consumer construal of price-fixing, price fairness and behavioural responses. In addition, our survey will use the Theory of Planned Behaviour (TPB) (Ajzen 1991) to investigate consumer attitudes and behaviour in relation to price-fixing. Finally, a focus group study will be used to finalize a nudging intervention, to further clarify the insights gained the experiment and survey results. The ultimate long-term objective of this study is a reduction in price-fixing activities in Hong Kong resulting in lower consumer prices and more choices for the consumers. Also, there will be educational implications in relation to both secondary and tertiary education. In addition, we seek to stimulate a new line of consumer marketing research in relation to price-fixing.