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Sherman Act – Horizontal Restraint of Trade

Cite this article as: Jason Mance Gordon, "Sherman Act – Horizontal Restraint of Trade," in The Business Professor, updated January 18, 2015, last accessed March 30, 2020, https://thebusinessprofessor.com/knowledge-base/sherman-act-horizontal-restraint-of-trade/.
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Horizontal Restraint of Trade - Sherman Act
This video explains what is a Horizontal Restraint of Trade under the Sherman Act.

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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?

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