Sherman Act - Horizontal Restraint of Trade - Explained
What is a Horizontal Restraint of Trade that Violates Antitrust Law?
Written by Jason Gordon
Updated at April 6th, 2023
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What is a Horizontal Restraint of Trade?
While there are several established types of horizontal restraint, any situation that meets the following elements may be illegal.
- Agreement - Was there an agreement between or among market participants?
-
Restraint- Was there an identifiable restraint of trade? If so, was the restraint:
- Naked with no pro-competitive justification? If so, it is per se illegal.
- Naked with a pro-competitive justification? Then apply the quick-look rule of reason.
- Not a naked restraint? Then the rule of reason applies.
Remember, there is no requirement that a business have extensive market power for conduct to be illegal under 1.
Next Article: Sherman Act - Sharing Information Back to: ANTITRUST LAW
Discussion Question
Why do you think a horizontal restraint requires an agreement among two or more businesses? How do you feel about the fact that market power is not required under Section 1?
Practice Question
ABC Corp sells a product throughout the US. ABCs largest competitor is 123 Corp, which sells a similar product. ABC and 123 enter into an agreement to work together in selling their products. If the arrangement between ABC and 123 is challenged by the FTC, what will a court look at to determine whether the situation constitutes a horizontal restraint of trade that violates antitrust law?
Related Topics
- Antitrust Law (Intro)
- What is Antitrust Law?
- What are the Major Antitrust Laws?
- What government agency enforces antitrust law?
- What Sanctions are available under antitrust law?
- What is the Sherman Act of 1890 (Sherman Act)?
- What is a Contract, Combination, of Conspiracy in restraint of trade?
- What is Per Se Illegality and the Rule of Reason?
- What is a Monopoly?
- Herfindahl Hirschman Index (HHI) Definition
- What businesses are exempt from the Sherman Act?
- Horizontal Restraint Sherman Act?
- Sharing Information?
- Refusal to Deal?
- Territorial Agreement?
- Price Fixing?
- Resale restraint?
- Exclusive dealing?
- Tying products?
- Territorial agreements?
- What is Monopolization under the Sherman Act?
- What is the Clayton Act of 1914 (Clayton Act)?
- What is price discrimination under the Clayton Act?
- What are special arrangements prohibited under the Clayton Act?
- When are tying contracts an illegal restraint under the Clayton Act?
- When are reciprocal dealing contracts an illegal restraint under the Clayton Act?
- How does the Clayton Act regulate mergers and acquisition?
- FTC Act Antitrust Law