Issues Related To Nonprice Agreements

• Pages: 129-141

129

CHAPTER VII

ISSUES RELATED TO NONPRICE AGREEMENTS

Agreements among competitors to divide or allocate markets are

usually prohibited as per se violations of the antitrust laws.470

Agreements among competitors to divide customers or territories are

considered to affect price in the same way as price fixing conspiracies.471

For example, in United States v. Topco Associates,472 the Supreme Court

applied per se treatment to an agreement among competitors to divide

markets, and rejected defendant’s claim that the restrictions were

reasonable because they fostered competition.

Utilities operating in newly competitive markets may face market

allocation issues. Utilities historically have enjoyed exclusive franchise

territories governed by state or federal law, but new partnerships among

utilities may provide services that are not franchised. In the absence of

government regulation, any agreement under which two or more

cooperating companies agree to specialize with respect to particular

services or customers should be carefully analyzed under the antitrust

laws.

A. Joint Conduct to Exclude Competition

1. Refusals to Deal

Agreements among competitors to refrain from dealing with other

competitors, customers, or suppliers—referred to as concerted refusals to

deal or group boycotts—historically were prohibited as per se violations

of Section 1 of the Sherman Act.473 More recently, however, courts have

470. United States v. Sealy, Inc., 388 U.S. 350 (1967).

471. See, e.g., United States v. Aquafredda, 834 F.2d 915, 918-19 (11th Cir.

1987); General Leaseways, Inc. v. National Truck Leasing Ass’n, 744

F.2d 588, 594 (7th Cir. 1984).

472. 405 U.S. 596 (1972).

473. For example, in Klor’s, Inc. v. Broadway-Hale Stores, 359 U.S. 207

(1959), the Supreme Court held that an alleged conspiracy between a

retail appliance store (Broadway-Hale) and appliance manufacturers not

to sell products to plaintiff (a competing retail store) at competitive prices

warranted condemnation regardless of the effect (or lack of effect) of the

agreement. The Court reasoned that “[g]roup boycotts, or concerted