Dividing territories,market division orhorizontal territorial allocation is an agreement by two companies to stay out of each other's way and reduce competition in the agreed-upon territories. The process known as geographic market allocation is one of severalanti-competitive practices outlawed underUnited States antitrust laws. The term is generally understood to include dividing customers as well. The competitors who agree to this type of arrangement will often reject business from customers in another's territory. Territorial allocation scheme results in an absence ofcompetition in prices and choice of products for the affected customers.[1] Such agreements can be illegal underantitrust regulation.
For example, in 1984,FMC Corp. and Asahi Chemical agreed to divide territories for the sale ofmicrocrystalline cellulose, and later FMC attempted to eliminate all vestiges of competition by inviting smaller rivals also to collude.[2]
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