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.
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.
