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

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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

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 9 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.


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