Group Boycott

Author:

Moneyzine Editor

2 mins

September 26th, 2023

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Definition

The term boycott refers to the act of abstaining from buying, using, or trading with a person, company, or country. When used in context of anticompetitive law, it refers to joint agreements between competitors to not do business with certain competitors, trade partners, or customers.

Boycotts are oftentimes instituted to raise awareness of a product's safety, quality, or environmental impact. When a group boycott agreement is made between competitors, it may be considered a criminal offense in the United States under antitrust laws.

Explanation

When two or more competitors in a given market refuse to do business with an individual or company, the result is a group boycott. Companies always have a right to not do business with another, but when this action involves an agreement between competitors, it's a violation of antitrust law.

Competitors will engage in boycotts to prevent new competitors from entering a market or as part of a price fixing scheme. For example, if a number of medical doctors band together and refuse to accept payment from an insurer due to low prices, this boycott of the insurer is illegal in the United States.

In addition to boycotts, anti-competitive practices may include dividing markets, bid rigging, disparagement, dumping, exclusive dealing, price fixing, tying, as well as the unethical collection of business intelligence.

Anti-competitive laws in the United States were passed to promote fair competition for the benefit of consumers. This includes a collection of both federal and state laws that are an extension of antitrust laws such as the Sherman Antitrust Act of 1890, the Clayton Act of 1914, and the Federal Trade Commission Act of 1914.

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