Final answer:
The practice involving businesses agreeing to not patronize another firm to reduce competition is known as restrictive practices, which are often less overt forms of collusion like cartel formation, and can include actions like tie-in sales and predatory pricing.
Step-by-step explanation:
The practice of two or more competing businesses agreeing to stop patronizing another firm in order to reduce competition in the market is a part of restrictive practices. These practices aim to reduce competition without involving outright agreements between firms to raise prices or to reduce the quantity produced. This kind of strategy can significantly impact market dynamics, similar to what occurs when firms in an oligopoly work together in collusion to act as a monopoly.
Collusion can lead to higher prices and reduced industry output, often realized through a formal agreement known as a cartel. However, antitrust laws block firms from such overt collusion, leading to attempts at more covert restrictive practices like tie-in sales, predatory pricing, and tying sales.