Anticompetitive Practices & Antitrust — Compliance Scenario
At a Trade Show, a Competitor Offers to Stop Pursuing Your Top Accounts If You Stop Pursuing Theirs. Is That Okay?
A real workplace compliance scenario — with three decision options and the right answer.
Quick Answer
Can competing companies agree informally to divide up customers or geographic markets? No — this is market allocation, a per se antitrust violation that is illegal regardless of how informal or reasonable the arrangement seems. An agreement between competitors to stop pursuing each other’s accounts eliminates competition in precisely the way antitrust law is designed to prevent. This scenario shows why even a casual conversation at a trade show can create serious legal exposure — and why turning down the offer is not enough.
The Situation
After a trade show event, you find yourself at the hotel bar next to a sales representative from a key competitor. The conversation is friendly — you talk about your families, the industry, and the pressure of hitting targets. Then the competitor’s rep pulls out their company’s client list, points to three key global clients, and makes a proposal: if you agree not to sell your services to those three clients over the next year, they’ll give you their word that their company won’t pursue your top three global clients. “It’s just practical,” they say. “We’d both be better off.”
What Should You Do?
Politely decline the offer. The arrangement sounds practical, but you’re not comfortable with it. You end the conversation on friendly terms and resume competing normally.
End the conversation immediately, decline the offer clearly, and report it to your Legal department. A competitor proposing a market allocation arrangement — even informally at a bar — is proposing an antitrust violation, and that conversation needs to be reported regardless of whether you agreed to anything.
Continue the conversation to understand the full proposal before deciding. You haven’t agreed to anything yet, so there’s no harm in hearing more about how it would work.
The Right Call
Choice B — End the conversation, decline clearly, and report to Legal immediately.
Turning down the offer is not enough. A competitor has just proposed an illegal market allocation agreement — even if informally and over drinks. That proposal creates a situation your Legal department needs to know about, both to document the conversation and to ensure your company’s subsequent actions in those markets cannot later be characterized as the result of an informal arrangement. The conversation itself is a reportable event.
Why This Code of Contact Scenario Is Harder Than It Looks
The social setting lowers the guard.
A casual conversation at a hotel bar feels fundamentally different from a formal business negotiation. The competitor’s rep is personable, the conversation started with family talk, and the proposal is framed as a practical solution to shared pressure. The informality of the setting is precisely why this type of antitrust violation is common and hard to recognize — it doesn’t feel like a legal matter. It feels like a conversation.
“We’d both be better off” is the market allocation pitch.
Mutual benefit is the stated rationale for nearly every illegal market allocation arrangement. The fact that both parties would benefit does not make the agreement legal — it makes it a more attractive form of an illegal arrangement. Antitrust law prohibits agreements that reduce competition specifically because competitors acting in their mutual interest produce exactly the outcomes competition is meant to prevent.
Hearing more (Choice C) increases exposure, not information.
Continuing the conversation to understand the full proposal doesn’t provide a safe harbor — it deepens the involvement. Antitrust enforcement examines all conversations in which competitors discussed market behavior, regardless of what was ultimately agreed upon. The longer the conversation continues, the more difficult it becomes to establish that no understanding was reached.
Why Declining Isn’t Enough
Choice A — declining the offer politely and going back to normal — is better than accepting. But it leaves an undocumented conversation in which a competitor proposed an illegal arrangement to your employee. Without a report to Legal, several problems remain:
- If your company later coincidentally avoids pursuing the competitor’s named clients, regulators examining the market could interpret that behavior as evidence that an informal agreement was reached
- The competitor may make the same proposal to someone else at your company, who responds differently
- Without documentation, your company has no record of having declined — only of having had the conversation
Frequently Asked Questions
What is market allocation and why is it illegal?
Market allocation is an agreement between competitors to divide customers, geographic territories, or products so each company operates without competition in its designated area. It is a per se antitrust violation — meaning it is illegal regardless of the intent behind it, the size of the companies involved, or the informal nature of the agreement. It eliminates competition precisely where antitrust law requires it to exist.
Can an informal conversation at a trade show create antitrust liability?
Yes. Antitrust violations do not require formal written agreements. An informal understanding reached between competitors — even verbally, in a social setting — can constitute an illegal agreement if it affects competitive behavior. The informality of the setting is not a defense; it is frequently the environment in which these arrangements are proposed because it feels less like a legal matter.
What should I do if a competitor approaches me at an industry event about our respective clients?
End the conversation as soon as the topic turns to specific clients, pricing, territories, or any arrangement that would affect competitive behavior between your companies. State clearly that you cannot discuss those topics, excuse yourself, and report the conversation to your Legal department as soon as possible. Document the time, place, and what was said.
What topics can I discuss with a competitor at an industry event?
General industry trends, publicly available information, and non-competitive topics are typically safe. Prohibited topics include pricing, specific customers or territories, bids, production levels, and any arrangement that could affect competition between the companies. When in doubt about whether a topic is appropriate, err on the side of ending the conversation and consulting Legal.
What are the consequences of a market allocation agreement?
Market allocation is a criminal antitrust violation. Consequences for both companies and individuals involved can include substantial fines, imprisonment for individuals, debarment from government contracts, and civil liability to customers who were harmed by the reduced competition. Antitrust enforcement agencies actively investigate these arrangements, and participants who cooperate with investigations may receive reduced penalties in exchange for evidence against other participants.
How to Use This CODE OF CONDUCT Scenario in Training
Antitrust and anticompetitive practices training establishes the policy. This Code of Conduct scenario makes it stick.
This scenario is particularly valuable for sales representatives and business development employees who attend industry events and may encounter competitors in social settings. The trade-show context is realistic, and the social framing — friendly conversation that escalates into an illegal proposal — is among the most common environments for antitrust exposure in sales organizations.
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