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

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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

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 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.


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