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What 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.
• Discussion: 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. ABC’s 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?