ABSTRACT
The term ‘horizontal restraints’ encapsulates all forms of collaborative arrangements between rivals that exclude competition between them, and sometimes other market participants. These collaborative arrangements are a fact of life, and can be seen in organized professional sports or in professional partnerships where individuals curtail their independence for the collective good of the partnership. Within corporate law firms, for example, fees are in general fixed for the services provided by partners, irrespective of skills or experience, and markets are shared in the sense of partners being restricted to work only in certain specialist areas as opposed to operating a general practice. The production of new medicinal and technological products, for example, usually requires a high level of investment and risks that may not be viable for only one company to undertake: competing producers or those in related fields may, in such a case, bind together to secure the emergence of a new product. Buyers of ordinary goods may also come together and form a purchasing cooperative so as to enjoy the benefits that flow from economies of scale. These instances reflect that collaborative arrangements can reduce transaction costs relating to production, distribution, standardization and free riding.
