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Practical Advice for Avoiding Hub-and-Spoke Liability

Rachel Brass and Caeli Higney, The Antitrust Source, October 2016

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It is axiomatic that the federal and state antitrust laws prohibit unreasonable agreements in restraint of trade. Most often, such agreements take one of two forms: (1) horizontal agreements made between competitors and (2) vertical agreements made up and down a supply chain, like those between a supplier and its distributors. Certain horizontal agreements, like agreements among competitors to fix prices or divide markets, and certain forms of group boycott agreements, are deemed per se illegal. In those circumstances, once the agreement’s existence is established, no further inquiry into the parties’ intentions or the practice’s actual impact on the market is necessary to establish a violation. Vertical agreements, by contrast, are analyzed under the rule of reason, which involves an examination of the particular context in which the restraint was adopted, including its effect on the relevant product market and any procompetitive justifications for the restraint. Sometimes, however, “the line between horizontal and vertical constraints can blur."

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