This contract tip is about one of the most important roles we have working with contracts is issue-spotting business or legal risks.
I always keep an eye out for potential antitrust and competition law violations when I work on deals between competitors. ere are the terms that I usually escalate to antitrust lawyers for further input and review:
1. Restrictions on doing business with other competitors - I watch for any deal that prohibits a party from working with a competitor or selling a competitor's products. These can be deemed against public policy depending on the length, scope, and market share of the entities involved.
2. Collaborating with your competitor - I also look for any information sharing among competitors. A red flag should go up anytime you have a contract sharing product, pricing, and customer information with your competitor. One common type of competitor collaboration is a co-marketing agreement. In these deals, companies agree to work together to expand their marketing and sales efforts.
3. Any predatory pricing strategies - I also evaluate whether the parties offer steep discounts that depend on purchasing both parties' products. If these discounts are loss leaders (i.e., less than the cost of the good), the deal might be viewed as a collaborative effort to eliminate competition.
What others would you add?
