Legal Definitions - group boycott

A group boycott occurs when a group of individuals or businesses agrees to collectively refuse to do business with a specific person, company, or organization. This refusal is typically intended to harm the target economically, force them to change their practices, or exclude them from a market. In many legal systems, particularly under antitrust laws, group boycotts are viewed as highly anticompetitive and are often considered illegal because they stifle fair competition.

Here are some examples to illustrate this concept:

• Example 1: Retailers against a New Competitor

  Imagine a small town where three established hardware stores have been the only options for years. A new, innovative hardware supplier enters the market, offering products at slightly lower prices and with a unique delivery service. The owners of the three existing hardware stores meet and agree that they will collectively refuse to purchase any products from a major national distributor if that distributor continues to supply the new competitor. Their goal is to pressure the distributor to stop doing business with the new store, thereby limiting the new store's access to inventory and making it harder for them to compete.

  This illustrates a group boycott because the three established stores, acting as a group, are refusing to deal with the national distributor to disadvantage a common competitor (the new hardware store).

• Example 2: Professional Service Providers Against an Insurer

  Consider a scenario where several independent dental practices in a particular city are unhappy with the low reimbursement rates offered by a dominant health insurance provider. After discussing the issue, the owners of five major dental clinics agree that they will all stop accepting new patients who are covered by this specific insurance company. They also decide to gradually phase out existing patients covered by that insurer. Their collective action aims to force the insurance company to negotiate higher reimbursement rates for dental services in the region.

  This is a group boycott because the dental practices, acting in concert, are refusing to provide services to patients covered by a specific insurance company, intending to exert economic pressure on that insurer.

• Example 3: Manufacturers Against a Discount Retailer

  Suppose a group of high-end fashion designers, who typically sell their clothing through exclusive boutiques, discover that a new online discount retailer has managed to acquire some of their previous season's inventory and is selling it at significantly reduced prices. Fearing that this will devalue their brands and harm their relationships with their traditional retailers, the designers collectively agree to blacklist any supplier or wholesaler who sells their products to this discount retailer, or to any similar discount outlet in the future. They threaten to pull their business from any supplier who does not comply.

  This demonstrates a group boycott as the fashion designers, as a collective, are refusing to deal with suppliers who engage with the discount retailer, aiming to prevent their products from being sold at lower prices and to protect their brand image and market strategy.