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Sherman Act Horizontal Restraint of Trade

11. 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?

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