Restrictive trade agreement financial definition of restrictive trade agreement
restrictive trade agreement
restrictive trade agreement an agreement entered into by two or more suppliers of a product which contains restrictions relating to such matters as prices, terms and conditions of supply, restrictions on the type of persons or businesses supplied etc. Such agreements, while conferring advantages to those firms party to them (for example enabling them to charge higher prices), may serve to limit or suppress competition in a market to the detriment of other suppliers and to the buying public. Restrictive trade agreements are prohibited by the COMPETITION ACT, 1998. See COLLUSION, CARTEL, CONCERTED PRACTICE.
The term restrictive trade agreement can be used also for an agreement entered into between a supplier and his distributors if it contains restrictions (for example EXCLUSIVE DEALING provisions) which deprive other suppliers of access to distribution outlets. See COLLUSION, CARTEL, RESTRICTIVE TRADE PRACTICES ACTS (1956,1968,1976).
restrictive trade agreement a form of COLLUSION between suppliers aimed at removing competition wholly or in part. For the most part, such agreements concentrate on fixing common prices and discounts but may also stipulate production quotas, market sharing and coordinated capacity adjustments. The main objection to restrictive agreements is that they tend to raise prices above competitive levels and serve to protect inefficient suppliers from the rigours of competition. COMPETITION POLICY in most countries, including the UK, takes a tough line on restrictive agreements, either prohibiting them outright or allowing them to continue only in exceptional circumstances. See COMPETITION ACT 1998, RESTRICTIVE PRACTICES COURT.
References in periodicals archive
Free of red tape and unshackled by restrictive trade agreements
, pro-Brexiteers believe hard-nosed Welsh agriculture could carve out a vibrant new future that is less dependent on state subsidy.