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In business and legal terms, a horizontal agreement refers to a type of agreement between competing companies that involves collaboration or coordination on certain aspects of their business operations. This could include agreements on pricing, marketing strategies, supplies, production, or distribution.

Horizontal agreements are generally prohibited under antitrust laws, which aim to promote fair competition and prevent anti-competitive behavior. However, there are certain situations where horizontal agreements may be allowed, such as when they result in cost savings or efficiency gains that benefit consumers.

One type of horizontal agreement that is generally allowed is a joint venture, which involves two or more companies pooling their resources and expertise to undertake a particular project or activity. For example, two airlines may form a joint venture to offer a new route or share flight codes, or two pharmaceutical companies may collaborate on research or development.

Another type of horizontal agreement that may be allowed under certain conditions is a trade association. Trade associations are organizations that represent the interests of companies in a particular industry or sector, and they may provide a forum for members to share information and discuss common issues. However, trade associations must be careful not to engage in anti-competitive behavior or exchange sensitive information that could harm competition.

Horizontal agreements that restrict competition are generally prohibited, including price-fixing, market allocation, and bid-rigging. Price-fixing refers to agreements between competitors to set prices or terms of sale, while market allocation involves dividing up customers or territories between competitors. Bid-rigging involves collusion between competitors to submit non-competitive bids or to agree not to bid against each other.

In summary, horizontal agreements refer to collaborations or coordination between competing companies on certain aspects of their business operations. While some types of horizontal agreements may be allowed under certain conditions, they must not result in anti-competitive behavior or harm competition. Companies should be aware of the risks and regulations involved in horizontal agreements, and seek legal advice if necessary.