Vertical Agreement


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Vertical Agreement

An agreement between two companies at different levels of the supply chain to work together. At its worst, a vertical agreement can indicate collusion. However, this is ordinarily not the case; a franchise contract, for example, is a vertical agreement.
References in periodicals archive ?
Competition law has a provision which deals with vertical agreement. Any agreement amongst enterprises or persons at different stages or levels of the production chain in different markets, in respect of production, supply, distribution, storage, sale or price of, or trade in goods or provision of services, including tie-in arrangement; exclusive supply agreement; exclusive distribution agreement; refusal to deal, resale price maintenance; and discrimination in supply or acquisition shall be an agreement in contravention of competition law.
The "modern" style of regulation heavily rested on the premise that the ability of a vertical agreement to produce anticompetitive effects hinges predominantly on the market power of the manufacturer making use of such restraints.
Given that the rules on vertical agreement are only reviewed once every 10 years, it is disappointing that the commission has not taken a more radical look at the way the rules operate in practice.
"Ignoring the well-founded and substantiatedC* arguments submitted during the procedure, the CPC adopted the charge of supposed vertical agreement between the company and its petrol stations," an EKO statement said.
Discon distorts modern group boycott doctrine by applying the label to NYNEX's vertical agreement. Group boycotts generally refer to agreements among horizontal competitors.(14) Twenty years ago, the Second Circuit held that a two-party vertical agreement may be considered a horizontal group boycott (though not a per se illegal boycott) if it sought to disadvantage a competitor of one of the parties.(15) Subsequently, the Supreme Court clearly rejected this reasoning: "[A] restraint is horizontal not because it has horizontal effects but because it is the product of a horizontal agreement."(16) In Discon, the panel relied on the earlier Second Circuit precedent without addressing the apparent contradiction.(17)
(C 368) 13, an agreement is not prohibited by Article 101 TFEU: (1) if the aggregate market share held by the parties to a horizontal agreement does not exceed ten percent on any of the relevant markets; or (2) if the market share held by each of the parties to a vertical agreement does not exceed fifteen percent on any of the relevant markets.
According to the CPC's statement, released yesterday, the companies were found to be guilty of both horizontal agreement (among themselves) and of vertical agreement (between firms up or down the supply chain from one another).
The core of this approach is that, in order to reach an assessment about a vertical agreement, its potential effects on the market should be analyzed.
Instead, it was the vertical agreement between a manufacturer and its distributor to engage in RPM that was illegal.
Substantive scrutiny of a vertical agreement under Article 81 thus requires an analysis of whether it restricts competition within the meaning of Article 81(1) and, if it does, whether it meets the Article 81(3) criteria and so is excepted from the Article 81(1) prohibition.
Significantly, in a recent health care antitrust conspiracy case, the Tenth Circuit addressed that issue, at least in the context of an alleged vertical agreement involving a health plan and its specialty suppliers of health services.
Under article 7 of regulation 2790/99, a national competition authority might withdraw the benefit of the block exemption in respect of a vertical agreement where the effects of the agreement are felt on the territory of the member state, or part thereof, "that has all the characteristics of a relevant geographic market." This approach was expanded in the proposal.