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Horizontal scheme

A cooperation agreement between competitors on the same level of commerce.  A horizontal scheme violates antitrust law if it involves price-fixing or any other recognized restraint on trade.  

See Antitrust Law

 

Four supermarket chains sell seafood in a particular state.  Three of the companies secretly agree to sync up their prices.  The companies then engage in predatory pricing by undercutting the seafood prices offered by the fourth supermarket chain.  

A year later, the fourth supermarket chain closes its seafood department because it can no longer compete.  The three companies then modify their horizontal scheme: they push seafood prices far above the national average and take turns offering discounts in an effort to avoid accusations of violating antitrust laws.

"Plaintiffs allege upon information and belief that [local telephone carriers] have entered into a contract, combination or conspiracy to prevent competitive entry in their respective local telephone and/or high speed internet services markets and have agreed not to compete with one another and otherwise allocated customers and markets to one another."

"[T]his is a case in which there is no dispute about the substantive law. If the defendants acted independently, their conduct was perfectly lawful.  If, however, that conduct is the product of a horizontal agreement among potential competitors, it was unlawful.  Plaintiffs have alleged such an agreement and, because the complaint was dismissed in advance of answer, the allegation has not even been denied."

"Because the plaintiffs here have not nudged their claims across the line from conceivable to plausible, their complaint must be dismissed."

Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 551, 570 (2007) (quotation marks and citation omitted); Id. at 571 (Stevens, J., dissenting).