Is it true that one company cannot pay a supplier to withhold its product from a competitor?

UPDATED: Feb 20, 2012

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Is it true that one company cannot pay a supplier to withhold its product from a competitor?

I believe one of the worlds largest organisations is paying a supplier to withhold a product from a competitor. It is an electronic product (software) and you pay to download it but the large organisation is paying to have it given to their customers before it is released to their competitor. Would this be legal under US Antitrust and European fair trade laws? As far as I was aware a manufacturer can freely choose to sell their product to whomever they choose but they are not allowed to accept money from business rivals to withhold the product from a competitor.

Asked on February 20, 2012 under Business Law, California


FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

Under the laws of all states in this country, one company cannot legally pay one of its suppliers to withhold its product from a competitor. Such conduct is an unfair business practice under state and federal law in that it for all intents and purposes precludes fair competition in the market and leads to the practice of monopolies that restrain trade unfairly in this country.

The issue is that a supplier can accept money to withhold product from a competitior by one company, but if the product is not withheld or not sold on fair terms, then there is nothing illegal with the acceptance of such payment.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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