ABSTRACT
Vertical restraints are the means by which an upstream firm (the supplier) seeks to control the conduct of a downstream firm (the distributor). They come in a myriad of forms. The main categories are resale price maintenance, selective distribution, and exclusive distribution where a distributor has the exclusive right to distribute a product within a territory or to a category of customer. By restraining the selling conduct of distributors, these practices restrict intrabrand competition. A further category of vertical restraint is exclusive dealing or purchasing, which prevents distributors from handling other suppliers’ products. As the restraint here bites on distributors’ conduct as buyers, it mainly affects interbrand competition through market foreclosure.
