Is it illegal for a competitor to restrict customers from using my product but allow them to use products from other competitors?

UPDATED: Oct 1, 2022

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Is it illegal for a competitor to restrict customers from using my product but allow them to use products from other competitors?

My competitor is singling out my company by name in his contracts and

claiming that if his customers choose to use our services then they are subject

to a higher price for his services. He is not naming any of the other competitors

that are common to both of our businesses. Is this legal? What are my options to

stop him from doing this or informing the customers if this is illegal?

Asked on August 23, 2018 under Business Law, Washington


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

It is 100% legal. He has no power to force his customers to not use your products--they are free to not sign his contract or do business with him, for example. He has no legal power over them. But a competitor is free to offer incentives to customers or potential customers to not use certain of his competitors. If people choose to not use you to get something of value from him (e.g. lower prices), that is perfectly legal. This is no different legally from when a cellphone company offers people a free phone or to have existing contracts paid off if they switch from a competitor. Also, he is under no obligation to treat al competitors the same. You could legally do the same thing to him in return--e.g. offer people some incentive to not use him or his product/business.

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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