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Business Articles Awards > Concerted Practices

FTC Scrutinizes Dual Distributor Communications

Stacey Anne Mahoney, Morgan Lewis, 2016

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A dual distribution relationship does not protect against Section 5 liability for an invitation to collude. For the first time, the Federal Trade Commission (FTC) has charged a company with violating Section 5 of the FTC Act for an alleged invitation to collude with a company that served as both a competitor and a supplier. Invitations to collude are solicitations by one competitor to another to coordinate on price, output, or other terms of competition. The FTC treats an invitation to collude as a violation of Section 5 of the FTC Act even when (a) the respondent does not possess market power, (b) the invitee did not accept the invitation, and (c) there is no evidence of competitive harm. Previously, the FTC had only sought liability for invitations to collude against entities that were horizontal competitors.

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