The following on horizontal market allocation is provided for educational purposes and not meant to be legal advice.
Generally, a company is free to select its customers and may refuse to deal provided the decision is reached independently and not based on any understanding with anyone else.
Example: It is permissible to decide not to deal with a certain party because of legitimate concerns such as creditworthiness.
However, any act or failure to act, performed in agreement with any customer, partner, competitor, or vendor in any sales or other transactions, that involves refusing to deal with a third party in an anti-competitive manner is prohibited.
Prohibited practices include:
(a) Agreeing with channel partners not to sell to a certain entity.
(b) Agreeing with other firms not to buy goods or services from a certain vendor.
(c) Warning or threatening a competitor or new market entrant against selling in a company’s geographic area or against selling to a company’s customers.
(d) Entering into non-compete or exclusivity clauses that reduce competition, are not objectively justified, or put a company in a dominant position.
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