Dividing territories (also market division) is an agreement by two companies to stay out of each other's way and reduce competition in the agreed-upon territories. The process known as geographic market allocation is one of several
anti-competitive practices
Anti-competitive practices are business or government practices that prevent or reduce competition in a market. Antitrust laws differ among state and federal laws to ensure businesses do not engage in competitive practices that harm other, usuall ...
outlawed under
United States antitrust law
In the United States, antitrust law is a collection of mostly federal laws that regulate the conduct and organization of businesses to promote competition and prevent unjustified monopolies. The three main U.S. antitrust statutes are the Sherman ...
s. The term is generally understood to include dividing customers as well.
For example, in 1984,
FMC Corp.
FMC Corporation is an American chemical manufacturing company headquartered in Philadelphia, Pennsylvania, which originated as an insecticide producer in 1883 and later diversified into other industries. In 1941 at the beginning of US involvemen ...
and Asahi Chemical agreed to divide territories for the sale of
microcrystalline cellulose Microcrystalline cellulose (MCC) is a term for refined wood pulp and is used as a texturizer, an anti-caking agent, a fat substitute, an emulsifier, an extender, and a bulking agent in food production. The most common form is used in vitamin sup ...
, and later FMC attempted to eliminate all vestiges of competition by inviting smaller rivals also to collude.
See also
*
Horizontal territorial allocation
Horizontal territorial allocation is an agreement among competitors at the same level of distribution of a product or service to solicit customers only within a certain geographic area. The competitors who agree to this type of arrangement will oft ...
*
Regional lockout
A regional lockout (or region coding) is a class of digital rights management preventing the use of a certain product or service, such as multimedia or a hardware device, outside a certain region or territory. A regional lockout may be enforced ...
*
Market allocation scheme
Market allocation or market division schemes are agreements in which competitors divide markets among themselves. In such schemes, competing firms allocate specific customers or types of customers, products, or territories among themselves. For ex ...
References
Anti-competitive practices
United States antitrust law
{{business-stub