Non-Compete Agreement That Restricts Competitor’s Entry Into the Market Violates Antitrust Laws

In C-E Mineral Inc. v. Carbo Ceramic Inc., Northern District ofGeorgia Judge J. Owen Forrester granted C-E Mineral Inc.’s motion for a preliminary injunction barring Carbo Ceramics Inc. from enforcing an eight-year-old non-compete provision in a supply contract to restrict C-E’s sales of rival ceramic proppants.  The injunction is part of a C-E’s declaratory suit seeking a court order that the non-compete provision violates the Sherman Act, as well as Georgia and Alabama antitrust laws.  In granting C-E’s injunction, the court held that although the supply agreement, on its own, was a vertical agreement, the non-compete provision is a horizontal allocation of at least the proppant market because it bars C-E, a potential competitor of Carbo, from entering the market.

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