"Hey.I have an idea," your CEO begins.

You brace yourself and smile."Oh yeah?"

He nods affirmatively and begins."I say we increase the price of our dry cleaning fluid by five percent tomorrow."

"Why is that?Things are looking pretty good for us right now."

He shakes off your reassurance."Yeah, but we can do better.You know Jerry's place, just down the road?"

You start to feel a sense of dread.Jerry is a competitor of your company in the dry cleaning market.He also has a less-than-stellar reputation in the business community.

"Of course.I know Jerry's Chemical Solutions.They produce dry cleaner fluid just like we do."

"Yep.And he and I have been talking.We're the only companies in the tri-state area who supply enough dry cleaning fluid to local companies.Transportation costs of all our other competitors are too high for them to supply the dry cleaners."

You're impressed.Your boss has been doing some research on the industry.

He continues."So Jerry and I had dinner last night after the Chamber of Commerce meeting.We'll both increase our prices by five percent starting tomorrow, and we'll be able to make a fortune."

"What happens if the government investigates why we increased our prices at the same time that Jerry's did?" you state."Collusion is illegal, and the government is rather serious about it."

The CEO smiles."It's ok.We didn't put anything down in writing.If the government investigates, we'll just say we're changing our prices due to evolving market conditions.If Jerry would have to respond to a new economic environment, then so would we!This is foolproof!"

Is the CEO correct?Why is it a bad idea for the CEO to take on this course of action? Try to play to his economic side instead of his legal sensibilities.