Question

In today’s economy, there are a wide number of powerful companies who in all appearances control massive segments of different markets. Using the Internet, identify one example within the last year of a large company that has (or might be) engaged in anticompetitive behavior and what type.  Next, suggest three ways that this behavior could be viewed as either a Horizontal or Vertical restraint of trade.  Be sure to explain and define these terms and provide support for your response - also find a company example THAT NO ONE HAS POSTED ABOUT.  

Answer 1

Unfair business practices that reduce competition ,lead to  higher prices, reduce  quality of service,or less innovation are referred as anticompetitive practices.Activities like price fixing,group boycotts,special dealing contracts are anticompetivie practices.

GlaxoSmith Kline , a British pharmaceutical multinational company , which has its head quarter in London ,and has business worth$30 billion is engaged in anticompetitive behaviour to increase the cost of drugs.This company filed false citizen petition, patient safety was not taken into consideration by bribing doctor,increased prices and curbed competition.

The FTC ( Federal Trade Commission)takes steps to control anticompetitive behaviour.Anti competitive behaviour can be horizontal or vertical restraint of trade.If the parties are competitors like manufacturers ,retailers, wholesalers  or may be other competitors , it is Horizontal restraint of trade ,and if the competition is between parties at different levels of distribution chain ie manufacturer and retailer , there is Vertical restraint of trade.However these two are not totally inseparable and a retailer may ask a manufacturer ,not to supply a competitor of the retailer, This is vertical restraint with effects of horizontal restraint.

Horizontal restraints are with other competitors in the market while vertical restraints is supplier -distributor reklationship. Certain acts are considered harmful to competition and are regarded illegal like price fixing or fixing higher prices , limiting competition or stopping other businesses from entering the market. Thus fixing prices, dividing market or rig bids are horizontal restraint of trade.It is unlawful for a company to monopolize trade.Horizontal restraint like price fixing can be done in three ways like Direct price fixing agreement ,exchanging price information and controlling output.Throughout an industry an effective means of price control is knowledge of competitors' prices.Competitors also fix prices by controlling an indistry's output.