Summary Vertical Agreements

Vertical Agreements


VERTICAL AGREEMENTS
Article 1.1(a) VRBE
1) Agreement
2) Entered into between 2 or more undertakings
3) Each operates at a different level of the production or distribution chain
4) (Re)sells certain goods or services.


BRAND COMPETITION
a) Inter-brand competition
 Competition dynamic relating to different brands of same product.


Single branding agreement
 Powerful retailer agrees to purchase X product only from Manufacturer A.
 Other manufacturers unable to sell products at this influential store.
 THUS their route to market => Restricted.
 *Depends on market power of retailer;
o Low power => Minimal impact on market => Other manufacturers will have other
available routes to market.


b) Intra-brand competition
 Competition dynamic relating to same branded product.


Problems
 Manufacturer insists all stores to sell product at same price.
 Manufacturer attempts to prevent/reduce competition between stores that stock its
goods.
 THUS no opportunity for stores to attract more consumers by lowering their price.
 THUS consumers forced to buy product at fixed price at all stores.