In the legal world, a horizontal agreement refers to a contract or agreement between two or more companies at the same level of the supply chain. This type of agreement is also known as a horizontal restraint of trade or an anti-competitive agreement.
Horizontal agreements typically involve agreements between competitors, such as agreements to fix prices, allocate customers or territories, or restrict output. These types of agreements can have serious consequences for competition and consumers, and they are often illegal under antitrust laws.
One of the primary reasons that horizontal agreements are considered anti-competitive is that they reduce competition between the parties involved. For example, if two or more companies agree to fix prices, they are essentially eliminating competition in pricing – which can lead to higher prices for consumers.
Another concern with horizontal agreements is that they can lead to market dominance by certain companies. If a group of competitors agrees to allocate customers or territories, for example, they are essentially dividing up the market among themselves – which can make it very difficult for new companies to enter the market and compete.
Overall, it`s important for companies to be aware of the potential consequences of horizontal agreements, and to avoid engaging in any activities that could be considered anti-competitive. If you are unsure about the legality of a particular agreement or activity, it`s always a good idea to consult with a legal professional who can provide guidance and advice.