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 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. 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
*
Market allocation scheme
References
Anti-competitive practices
United States antitrust law
{{business-stub