A group boycott agreement, also known as a concerted refusal to deal, is a type of antitrust violation that occurs when two or more companies agree to boycott or refuse to do business with a particular supplier, customer, or competitor. This type of agreement is illegal under U.S. antitrust law and can result in severe penalties for the companies involved.
The purpose of a group boycott agreement is to eliminate competition and increase profits for the participating companies. For example, if two competing retail stores agree to boycott a particular supplier, they can force that supplier to lower their prices or go out of business. This leaves the participating stores with a larger share of the market and more potential profits.
Group boycott agreements are particularly harmful to small businesses and new market entrants. These companies may not have the same bargaining power as larger corporations and can easily be driven out of business by a concerted refusal to deal. Additionally, a group boycott can limit the availability of goods and services, resulting in higher prices for consumers.
Under U.S. antitrust law, group boycott agreements are considered per se illegal. This means that they are illegal regardless of the impact on competition or the market. Companies found guilty of a group boycott agreement can face significant fines and other penalties. In some cases, individuals involved in the agreement can also be held liable.
To ensure compliance with antitrust law, companies should avoid any discussions or agreements with competitors that involve boycotts or refusals to do business with specific suppliers, customers, or competitors. If a situation arises where a competitor is engaging in anticompetitive behavior, companies should report it to antitrust authorities for investigation.
In conclusion, a group boycott agreement is a type of antitrust violation that is illegal under U.S. law. Companies found guilty of a group boycott agreement can face significant penalties, and individuals involved in the agreement can also be held liable. To ensure compliance with antitrust law, companies should avoid any discussions or agreements with competitors that involve boycotts or refusals to do business with specific suppliers, customers, or competitors.