Sherman Act - Horizontal Restraint of Trade
What is a Horizontal Restraint of Trade that Violates Antitrust Law?
Written by Jason Gordon
Updated at July 5th, 2021
- Marketing, Advertising, Sales & PR
- Accounting, Taxation, and Reporting
- Professionalism & Career Development
-
Law, Transactions, & Risk Management
Government, Legal System, Administrative Law, & Constitutional Law Legal Disputes - Civil & Criminal Law Agency Law HR, Employment, Labor, & Discrimination Business Entities, Corporate Governance & Ownership Business Transactions, Antitrust, & Securities Law Real Estate, Personal, & Intellectual Property Commercial Law: Contract, Payments, Security Interests, & Bankruptcy Consumer Protection Insurance & Risk Management Immigration Law Environmental Protection Law Inheritance, Estates, and Trusts
- Business Management & Operations
- Economics, Finance, & Analytics
- Courses
Table of Contents
What are the commonly recognized types of horizontal restraint?Discussion QuestionPractice QuestionAcademic ResearchWhat are the commonly recognized types of horizontal restraint?
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?