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What is a ‘refusal to deal’?
Many states have enacted statutes, based upon the Sherman Act, that allow purely private business manufacturers the right to use their discretion in choosing the parties they want to do business with. Additionally, a manufacturer may discontinue a sales relationship with a customer whenever it chooses, so long as, there is no monopolization, conspiracy or combination of either. Therefore, a manufacturer or distributor of a product may restrict its sales to authorized dealers or provide certain exclusive territories to dealerships. Nevertheless, if a manufacturer or distributor creates an agreement with its customers, dealers or franchisees that has an anti-competitive purpose or motive or if the agreement may produce the effect of anti-competition, even though there is no actual effect on competition, the State or Federal statutes may be violated. Such agreements are known as horizontal restraints of trade and are illegal per se. Generally, exclusive independent agreements to deal are valid unless there is a conspiracy agreement refusing to deal or a group boycott. For a more detailed discussion and application of these rules and regulations, please seek the advice of an attorney. |
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