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Simple English definitions for legal terms
horizontal restraint
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A quick definition of horizontal restraint:
A horizontal restraint is when businesses at the same level of distribution make an agreement to limit competition, create a monopoly, or raise prices. This is usually illegal, but can be considered reasonable if it benefits both parties and the public. It is called "horizontal" because it involves competitors at the same level.
A more thorough explanation:
A horizontal restraint is a type of restraint of trade that is imposed by an agreement between competitors at the same level of distribution. This means that businesses at the same level, such as two retailers or two manufacturers, agree to limit competition between them.
For example, two gas stations in the same town might agree to keep their prices at the same level, even if one of them could charge more. This would be a horizontal restraint because it is an agreement between two businesses at the same level of distribution.
Horizontal restraints are usually illegal because they limit competition and can lead to higher prices for consumers. However, they may be considered reasonable if they are in the best interests of both parties and the public.
It is important to note that a horizontal restraint is different from a vertical restraint, which is an agreement between firms at different levels of distribution, such as a manufacturer and a retailer.
Overall, horizontal restraints are a type of antitrust violation that can harm competition and consumers.