A horizontal restraint occurs when businesses operating at the same distribution level enter into an agreement to restrict competition, establish a monopoly, or increase prices. While typically illegal, it may be deemed acceptable if it mutually benefits both parties and the general public. The term “horizontal” is used because it involves competitors operating at the same level.
A horizontal restraint refers to a form of trade restriction that is established through an agreement between competitors operating at the same distribution level. This implies that businesses at the same level, like two retailers or two manufacturers, mutually agree to limit competition between them. For instance, two gas stations in a particular town might decide to maintain their prices at the same level, even if one of them could potentially charge higher. This arrangement qualifies as a horizontal restraint since it involves an agreement between two businesses operating at the same distribution level. Generally, horizontal restraints are deemed illegal as they restrict competition and can result in higher prices for consumers. However, they may be considered acceptable if they serve the best interests of both parties and the public. It is important to distinguish horizontal restraints from vertical restraints, which are agreements between firms operating at different distribution levels, such as a manufacturer and a retailer. In summary, horizontal restraints are a type of antitrust violation that can negatively impact competition and consumers.
A horizontal restraint refers to an agreement or practice among competitors operating at the same level of the supply chain that restricts competition. It can include price-fixing, market allocation, or bid-rigging.
Horizontal restraints are generally considered illegal under antitrust laws, as they restrict competition and harm consumers. However, there are certain exceptions and justifications that may make them legal under specific circumstances.
Examples of horizontal restraints include agreements among competitors to fix prices, divide markets, allocate customers, or collude on bids. These practices aim to eliminate competition and increase profits for the participating companies.
In some cases, horizontal restraints may be justified if they can be proven to have pro-competitive effects, such as enhancing efficiency, promoting innovation, or benefiting consumers. However, the burden of proof lies with the parties involved in the restraint.
Engaging in horizontal restraints can lead to severe legal consequences, including hefty fines, criminal charges, civil lawsuits, and reputational damage. Additionally, individuals involved may face personal liability and even imprisonment.
Horizontal restraints are often detected through market monitoring, whistleblower reports, or complaints from affected parties. Once detected, antitrust authorities or regulatory bodies conduct investigations to gather evidence and determine the legality of the restraint.
Yes, individuals involved in horizontal restraints can be held personally liable for their actions. This includes executives, managers, and employees who actively participate or facilitate the restraint. They may face fines, imprisonment, or other penalties.
Antitrust laws play a crucial role in regulating horizontal restraints by promoting fair competition, protecting consumers, and preventing anti-competitive practices. These laws vary across jurisdictions but generally aim to maintain a level playing field in the market.
To ensure compliance with antitrust laws, businesses should establish robust compliance programs, provide antitrust training to employees, regularly review and update their policies, and seek legal advice when engaging in collaborations or agreements with competitors.
If you suspect a competitor is engaging in a horizontal restraint, it is advisable to consult with an antitrust attorney or report your concerns to the relevant antitrust authorities. They can guide you on the appropriate steps to take and investigate the matter further.
This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.
This glossary post was last updated: 17th April 2024.
To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.
- Page URL:https://dlssolicitors.com/define/horizontal-restraint/
- Modern Language Association (MLA):Horizontal Restraint. dlssolicitors.com. DLS Solicitors. May 09 2024 https://dlssolicitors.com/define/horizontal-restraint/.
- Chicago Manual of Style (CMS):Horizontal Restraint. dlssolicitors.com. DLS Solicitors. https://dlssolicitors.com/define/horizontal-restraint/ (accessed: May 09 2024).
- American Psychological Association (APA):Horizontal Restraint. dlssolicitors.com. Retrieved May 09 2024, from dlssolicitors.com website: https://dlssolicitors.com/define/horizontal-restraint/
Our team of professionals are based in Alderley Edge, Cheshire. We offer clear, specialist legal advice in all matters relating to Family Law, Wills, Trusts, Probate, Lasting Power of Attorney and Court of Protection.
All author posts