Agreement Among Competitors To Refuse To Do Business With A Third Party

Posted: September 9, 2021 in Uncategorized

In NYNEX Corp. v. Discon, Inc., 525 U.S. 128 (1998), the Supreme Court distinguished between horizontal and vertical group boycotts. Here, the Tribunal decided that an agreement by one company to purchase from a particular supplier (defendant) while refusing to purchase from another supplier (complainant) is an “intrinsic” vertical restraint subject to a rule of common sense and not to the rule itself. For Section 1 of the Sherman Act to apply, a plaintiff must prove that the defendants` conduct involves concerted action – an agreement. The question of an agreement or conspiracy is simple abstract (unless you`re talking to law professors or economists), but not always easy for the courts to judge in practice. In contrast, Basset`s Sixth Circuit v. National Collegiate Athletic Ass`n, 528 F.3d 426 (6th Cir.

2008) stated that NCAA rules prohibiting the recruitment of prospective students do not involve commercial activity, as they should promote and ensure the competitiveness of NCAA member schools. Furthermore, in NAACP v. Claiborne Hardware Co., 458 U.S. 886 (1982), the Court concluded that, although the case concerned a group boycott, it was not intended to destroy legitimate competition, so an analysis of the motivation was appropriate. Any company may refuse alone to do business with another company, but an agreement between competitors not to do business with targeted persons or companies may be an illegal boycott, especially when the group of competitors working together has market power. For example, a group boycott can be used to implement an illegal price cartel agreement. In this scenario, competitors agree not to do business with others, except on agreed terms, typically with the result of price increases. An independent decision not to offer services at dominant prices does not raise anti-cartel issues, but an agreement between competitors not to offer services at dominant prices in order to obtain an agreed (and generally higher) price raises anti-dominance concerns. Q: I am a purchasing manager and I have problems with a supplier who always arrives late with deliveries and does not return my calls.

I have heard that other companies have stopped doing business with him. Can I recommend that my company find another supplier? Sometimes refusing to trade with customers or suppliers is the effect of preventing them from dealing with a rival: “I refuse to treat you when you are dealing with my competitor.” For example, in one case in the 1950s, a city`s only newspaper refused to make ads for companies that also ran ads on a local radio station. The newspaper monitored radio ads and resered its advertising contracts with any company that phoned ads on the radio. The Supreme Court found that the newspaper`s refusal to deal with undertakings using the radio station strengthened its dominant position in the local advertising market and threatened to eliminate the radio station as a competitor. Other cases in which the courts have applied the rule of reason analysis to horizontal group boycotts outside of the price concerned, among others, government policy objectives, legitimate business objectives of boycotting parties, or norm-setting. . . .

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