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Refusal to deal is a legal term for firms refusing to do business with an organization, business or individual. Generally speaking, companies can pick and choose their customers as they like. However, refusal to deal may be considered illegal when it is intended to prevent competition. The definition and interpretation of refusal to deal varies from one jurisdiction from the next. The following are illustrative examples.
ServicesAn electric utility owns a ski resort as a side business. A price war erupts with competing ski resorts in the area and the utility cuts power services to the competition.InfrastructureA railway company owns an essential link between two regions. They will not accept freight from competing railways as they want to have a monopoly on shipping end-to-end between the two regions.
AdvertisingA small town TV station refuses ads from the only competition in town, a radio station.PatentsA electronics company buys an essential patent and refuses to license it to any competitors. This enables the company to have a monopoly position in a particular type of device. FacilitiesAn airline owns the only fueling station at a remote airport and refuses to serve the competition.Group BoycottA dominant grocery chain refuses to buy bread from a bakery unless that bakery stops doing business with a competing grocery store. This flavor of refusal to deal is known as a group boycott.|
Type | | Definition | Refusing to do business with an organization, company or individual in hopes of eliminating competition. | Related Concepts | |
Business Metrics
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A few examples of conflict of interest.
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A definition of internal controls with examples.
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