Legal Definitions - market-recovery program

A market-recovery program refers to an illegal agreement or scheme among competing businesses designed to reduce competition within a specific market. These programs typically involve competitors colluding to fix prices, allocate customers or territories, or rig bids. The goal is often to "recover" or maintain market share, increase profits, or stabilize prices for their mutual benefit, rather than engaging in fair competition. Such agreements are considered anti-competitive and violate antitrust laws because they harm consumers by limiting choices and artificially inflating costs.

Here are some examples to illustrate this concept:

• Example 1: Bid Rigging in Public Contracts

  Imagine three major landscaping companies that frequently bid on municipal park maintenance contracts in a particular city. Instead of competing honestly, their executives secretly agree that for the next year, they will take turns submitting the lowest bid for different projects. For instance, Company A will submit the lowest bid for the downtown park, Company B for the uptown park, and Company C for the riverside park, while the others submit intentionally higher bids. This ensures each company secures a share of the lucrative contracts without genuine price competition.

  This illustrates a market-recovery program because the companies are colluding to "recover" or secure a predictable portion of the market (public landscaping contracts) by eliminating competitive bidding. This artificial arrangement prevents the city from getting the best possible price, as the companies are not truly competing against each other.

• Example 2: Customer Allocation in Specialized Services

  Consider two leading consulting firms specializing in cybersecurity for financial institutions. Instead of aggressively competing for every potential client, their senior partners secretly agree to divide the market. Firm Alpha will exclusively pursue clients with assets over $10 billion, while Firm Beta will focus on institutions with assets under $10 billion. They even agree not to respond to unsolicited requests from clients in the other firm's designated segment.

  This is a market-recovery program because the firms are artificially "recovering" or maintaining their market positions by eliminating competition for specific customer segments. This ensures a steady stream of business for each without having to offer more competitive pricing or innovative services to win clients, ultimately limiting choices for financial institutions seeking cybersecurity expertise.

• Example 3: Price Fixing and Territory Division for Retail Products

  Suppose three regional distributors of a popular brand of organic coffee beans operate across a multi-state area. They hold a clandestine meeting where they agree that Distributor X will only sell in the northern states, Distributor Y in the central states, and Distributor Z in the southern states. Furthermore, they agree to maintain a minimum retail price for the coffee beans across all their territories, ensuring higher profit margins for all of them.

  This constitutes a market-recovery program because the distributors are colluding to "recover" or secure higher profits and stable market shares by eliminating price competition and dividing geographical territories. This prevents consumers in any of the states from benefiting from lower prices that would naturally result from genuine competition among the distributors.