Legal Definitions - combine

In legal contexts, particularly within antitrust and competition law, the term "combine" most often refers to a combination in restraint of trade. This describes a situation where two or more independent entities, such as businesses or individuals, agree or act together to restrict competition in a market. The purpose of such a combine is typically to manipulate market conditions for their own benefit, often at the expense of consumers and fair market practices. These actions are generally illegal because they undermine the principles of a free market by artificially influencing prices, limiting consumer choices, or hindering new businesses from entering the market.

Here are some examples illustrating what a "combine" entails:

• Example 1: Price-Fixing Agreement

  Imagine three major manufacturers of a popular electronic gadget secretly meet and agree to all raise their prices by 15% simultaneously. They also agree not to offer any discounts or promotions for the next six months. This ensures that consumers have no cheaper alternatives from competing brands.

  How this illustrates the term: This is a combine because the manufacturers, who should be competing, are instead acting together (combining) to fix prices. This eliminates competition, artificially inflates costs for consumers, and is a clear restraint of trade.

• Example 2: Market Allocation Scheme

  Consider two large catering companies operating in the same city. They decide to divide the market: Company A will exclusively bid on corporate events, and Company B will exclusively bid on private parties and weddings. They agree not to compete for each other's designated segments.

  How this illustrates the term: This scenario represents a combine as the two companies are jointly agreeing to allocate customers or market segments. By doing so, they eliminate competition between themselves for specific types of events, which limits choices for clients and can lead to higher prices due to reduced competitive pressure.

• Example 3: Bid Rigging for Public Contracts

  A city government issues a tender for a major road construction project. Three construction firms, usually fierce competitors, secretly agree that Firm X will submit the highest bid, Firm Y will submit a slightly lower but still uncompetitive bid, and Firm Z will submit the lowest bid, ensuring Firm Z wins the contract. In return, Firm Z promises to subcontract a portion of the work to Firm X and Firm Y.

  How this illustrates the term: This is a combine because the construction firms are working together to manipulate the bidding process. Instead of genuinely competing, they are coordinating their bids to predetermine the winner, which defrauds the city by preventing it from getting the most competitive price and constitutes a restraint of trade.