Market sharing

The following Competition practice note provides comprehensive and up to date legal information covering:

  • Market sharing
  • Types of market sharing agreements—checklist

Market sharing

Where competitors 'carve up' markets or customers, or limit access into a market they are in effect isolating their business from competition. Conduct which seeks to 'limit or control' markets or amounts to 'sharing' markets is specifically prohibited.

As with price fixing, this eliminates price competition between companies and also limits choice for customers as competitors withdraw from particular markets.

Types of market sharing agreements are:

  1. sharing geographic markets—eg where competitors agree to exclusivity in particular areas and that they won't encroach on each others' territory

  2. sharing customers, for example, competitors taking different markets (eg retail or wholesale trade) and agreeing not to 'poach' the other's customers, and

  3. by limiting output, competitors can control the price of their products. This can be done through foreclosing a market to new competitors and volume control measures like quotas.

Market sharing agreements are unlikely to be exempted from the prohibition because of their serious restrictive effects and also

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