A horizontal agreement, also referred to as a horizontal restraint, is a type of agreement between companies that operate at the same level within a particular industry. In other words, it is an agreement in which two or more businesses that are in direct competition with each other agree to work together for a common purpose.

Horizontal agreements can come in many forms, including price-fixing agreements, market-sharing agreements, and agreements to limit production or supply. Despite their potential benefits, these types of agreements are often illegal under antitrust laws, which seek to promote competition and prevent anti-competitive behavior.

One of the primary concerns with horizontal agreements is that they can lead to a reduction in competition within a particular market. For example, if two companies agree to set prices at an artificially high level, they effectively eliminate the need for customers to shop around for the best deals. This can lead to increased profits for both companies, but it also reduces the benefits of competition for consumers.

In some cases, horizontal agreements may be allowed if they can be shown to produce significant benefits for consumers or for the industry as a whole. For example, if two companies agree to collaborate on research and development, they may be able to create new products or technologies that have broader benefits for society. Similarly, if several companies in a particular industry agree to adopt common standards or practices, this may help to streamline operations and reduce costs for all participants.

Ultimately, the legality of a particular horizontal agreement will depend on many factors, including the specific nature of the agreement, the size and market power of the companies involved, and the potential impact on competition within the industry. As a professional, it is important to be aware of these issues and to ensure that any content related to horizontal agreements accurately reflects the legal and ethical considerations involved.