Legal Definitions - concerted refusal to deal

A concerted refusal to deal occurs when two or more individuals or businesses agree together to stop doing business with a specific third party. This collective action is a form of boycott where the participants intentionally withhold their goods, services, or patronage from someone else.

In the context of antitrust law, such agreements are closely examined because they can harm competition. By collectively refusing to engage with a particular entity, the participants might unfairly disadvantage a competitor, limit consumer choice, or manipulate market conditions. Depending on the nature and impact of the agreement, a concerted refusal to deal can be considered an illegal anti-competitive practice.

Here are some examples illustrating a concerted refusal to deal:

• Example 1: Blocking a New Competitor

  Imagine three dominant internet service providers (ISPs) in a particular city. A new, innovative startup ISP enters the market, offering faster speeds and lower prices. The three established ISPs, concerned about losing market share, secretly agree that none of them will allow the new startup to use their existing infrastructure (like utility poles or fiber optic lines) to expand its network, even though they have done so for other smaller providers in the past. This effectively prevents the new ISP from reaching potential customers.

  How it illustrates the term: This is a "concerted refusal to deal" because the three dominant ISPs *agreed* (concerted) *not to do business* (refusal to deal) by denying infrastructure access to the new startup ISP (the third party). Their collective action aims to stifle competition from the new entrant.

• Example 2: Pressuring a Discount Retailer

  A popular chain of electronics stores begins selling products at significantly lower prices than its competitors, often undercutting the manufacturer's suggested retail price. Five major electronics manufacturers, unhappy with the price erosion and potential damage to their brand image, meet and decide that they will all stop supplying their products to this particular discount chain. They inform the chain that unless it raises its prices, they will no longer fulfill its orders.

  How it illustrates the term: Here, the five manufacturers *agreed* (concerted) to *stop selling their products* (refusal to deal) to the discount electronics chain (the third party). Their joint decision is an attempt to collectively pressure the retailer into changing its pricing strategy, potentially limiting consumer access to lower-priced goods.

• Example 3: Targeting a Service Provider

  A group of independent trucking companies in a region frequently uses a specific repair shop for their vehicle maintenance due to its quality and fair pricing. A new, larger repair chain opens, offering even lower prices and faster service. In response, the existing repair shop, along with two other smaller local repair shops, collectively approaches the trucking companies. They inform the trucking companies that if any of them continue to use the new, cheaper repair chain, the three original repair shops will refuse to service their vehicles altogether.

  How it illustrates the term: This scenario involves the three established repair shops *agreeing* (concerted) to *refuse to provide services* (refusal to deal) to any trucking company (the third party) that chooses to patronize their new competitor. This collective threat is designed to coerce the trucking companies and protect the market share of the existing repair shops.