What is market allocation and how is it illegal?

Market allocation is an agreement between two or more companies to divide up sales or geographic markets among them in an anti-competitive way. The purpose of market allocation is to keep other companies out of the market and maintain the price of goods and services at a higher than competitive level. In California, market allocation is illegal under antitrust law. The antitrust laws seek to prohibit certain anti-competitive activities, such as market allocation, which reduces the effectiveness of market competition. Market allocation reduces the effectiveness of competition by lowering the incentives of companies to invest in new resources, research, and development. Companies in an agreement to allocate the market also have an incentive to raise prices in order to maximize their own profits. The California antitrust laws are designed to protect consumers from the negative effects of market allocation, such as higher prices and lower quality goods. Companies are prohibited from entering into agreements that would limit competition or distort the market. It is also illegal for companies to provide competitors with information that would help them set the price of goods or services at an artificially high level. The antitrust laws in California also prohibit companies from engaging in practices that lead to market allocation. This includes engaging in ex-post facto agreements, tying or refusing to deal with companies, or attempting to monopolize a market. Companies found to be in violation of the antitrust laws can face severe fines and civil penalties.

Related FAQs

What are the consequences of an antitrust violation?
What is the role of the Department of Justice (DOJ) in antitrust enforcement?
What is the role of the Federal Trade Commission (FTC) in antitrust enforcement?
What is the relationship between antitrust law and freedom of speech?
What rules and regulations are associated with antitrust law?
What can be done to prevent antitrust violations?
How does antitrust law apply to government procurement?
How does antitrust law apply to mergers and acquisitions?
What antitrust laws are specific to the US?
What is the history of antitrust law in the US?

What is market allocation and how is it illegal?

Related FAQs

Related Blog Posts