restrictive trade practice

Any agreement between people in a particular trade or business that restricts free trade in a market. For example, several producers may join together to form a cartel and fix prices; or a manufacturer may refuse to supply goods to a retailer if the retailer stocks the products of a rival company.

Restrictive trade practices are illegal in the UK. Any company found guilty of such practices can be fined. However, a restrictive trade practice can be legal if registered with the Office of Fair Trading and/or found to be in the public interest by the Restrictive Practices Court. Very few such cases exist, although one is the Net Book Agreement which allows publishers to force bookshops to sell books at a price fixed by the publisher. This agreement was upheld by the court because it was felt that abandonment of the agreement would lead to price cutting and the closure of many small bookshops unable to compete with large chains such as WHSmith and Dillons.