Refusal to Deal

A final context in which antitrust litigation might arise is in what is known as a “refusal to deal,” or “group boycott.” A group boycott is a type of secondary boycott, which means that the boycott is not intended to hurt the company being boycotted, but instead, a competitor with whom the boycotted company does business with. Often, a new market entrant supplier will sell to a rival of a group of competitors in the relevant market. In protest of this business activity, and in an effort to coerce the new supplier into ceasing doing business with the rival, the competitors will team up and refuse to buy the supplier’s product unless the supplier stops selling to the rival.

If this sounds complicated, that’s because it is. The main takeaway to remember in this context is that the teaming up of competitors to negatively influence the rival’s competitive presence in the market is prohibited by the Sherman Antitrust Act. Essentially, the firms should all be rivals of one another, and never “team up” to make any sort of concentrated effort. By coercing a supplier into ceasing business relations with a competitor, the group of firms conducting the boycott is colluding in an effort to reduce market competition, which is expressly outlawed by section one of the Sherman Antitrust Act.

A refusal to deal, or group boycott, is a per se violation of the Sherman Act. This is to say that no justifications may be offered in a criminal prosecution for a group boycott as to why the boycott was merited or what the boycotted firm was doing wrong. It is the agreement as part of a joint effort to reduce competition that is prohibited, and it is prohibited under all circumstances. It is no defense that general public could have bought from the supplier at any time and failed to do so. Nor is it a defense that the boycotting group acted with good motives. This is precisely why it is imperative that an antitrust defendant make retaining a skilled and competent antitrust attorney his number one priority. The seasoned trial veterans at Parkman White, LLP offer antitrust law expertise and years of trial experience.