McGuirl on Identifying Antitrust Risks

McGuirl on Identifying Antitrust Risks


In reviewing contracts or business practices and otherwise advising clients, attorneys often must recognize conduct that presents antitrust risks. In this Analysis, Maureen McGuirl provides an introduction to Horizontal Restraints, a key antitrust issue regarding which an attorney without extensive antitrust experience might not be aware. Ms. McGuirl also sets out a frame-work to assist small firm or solo practitioner attorneys in that task. She writes:
 
     Antitrust risk is present in any activity that affects competition in trade or commerce of any sort. The existence of, and the degree of, risk depends on two critical factors: (1) whether the conduct is unilateral or concerted; and (2) whether any agreement is horizontal or vertical.
 
     . . . .
 
Horizontal or vertical restraint
 
     Horizontal agreements are those among persons at the same distribution level (competitors).
 
     The legality of some horizontal agreements is judged under the per se rule.
 
     Vertical agreements are those among persons at different distribution levels, such as suppliers and customers.
 
     The lawfulness of vertical agreements is judged under the rule of reason.
 
     . . . .
 
Practice Tip
 
     In reviewing contracts, even those between a firm and its supplier or customer, counsel should take steps to determine if any terms, especially those affecting price or restricting sales to particular customers, categories of customers, or geographic areas, were adopted after consultation with competitors.
 
     Bid rigging occurs when competitors agree in advance on who will win a bid. Bid rigging can include bid suppression schemes, where one or more firms who otherwise would bid or had previously bid, agree to refrain from bidding or withdraw a bid so that the designated winner's bid will be accepted. In complementary bidding, some firms agree to submit bids that are too high to be accepted or that contain terms that will not be accepted by the buyer. The complementary bids are submitted not to obtain a contract but to make it appear that competitive bidding has taken place. Sometimes competitors enter into bid rotation schemes in which the colluders agree to take turns being the low or winning bidder. Bids may be allocated so that each company receives a certain amount of business. Sometimes, colluders agree that the firms that do not bid or intentionally submit non-winning bids, or that agree to withdraw bids, will receive subcontracts from the winner.
 
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