An agreement between competitors to divide territories, assign customers, or fix prices constitutes a restraint of trade. Such arrangements limit consumer choice and stifle competition. For example, two companies might agree that one will exclusively serve customers east of the Mississippi River while the other serves those to the west. This eliminates competitive pressures within each respective area and can lead to higher prices or reduced service quality.
This type of agreement undermines the fundamental principles of a free market. It removes the incentive for businesses to innovate, improve efficiency, and offer competitive pricing. Historically, these agreements have been used to establish monopolies or oligopolies, allowing participating companies to exert undue influence over specific sectors of the economy. Consequently, laws and regulations are often in place to prevent and punish such conduct, protecting consumers and promoting fair competition.
