Summary: Ch 10: Vertical Restraints In General (Vertical Restraints I)

Read the summary and the most important questions on Ch 10: Vertical Restraints in General (Vertical Restraints I)

• 1 Ch 10: Vertical Restraints in General (Vertical Restraints I)

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• Current Law on Vertical Restraints

  All VRs are subject to the full rule of reason, with only one real exception: Tying arrangements

• Standard for Tying Arrangements

  Ties are subject to a structured rule of reason analysis, sometimes called the "per se" rule for tying. The main difference between the tying standard and the ordinary rule of reason is that, in a tying case, once the plaintiff shows MP in one market, he is not required to prove that this MP could have an anti-competitive effect.

• Why does the Horizontal v Vertical Restraint distinction matter?

  Because no vertical restraints are subject to per se treatment, plaintiffs challenging a vertical restraint will almost always try to show that it is in fact horizontal in nature of has some horizontal aspect that would justify per se treatmenet

• Two broad types of vertical restraints

  1. Price Restraints (AKA "Vertical Price-Fixing," "Resale Price Maintenance" or RPM)
  2. Non-price restraints. 

• Define: Price Restraints (Vertical Price-fixing, or RPM)

  A buyer and a seller agree to prices at which the good will be resold. Pricing restraints can set either a maximum or minimum resale price.

• Define: Non-price vertical restraints

  An upstream manufacturer might give its downstream distributor an EXCLUSIVE RESALE TERRITORY--that is, the manufacturer might agree to not allow any of its other distributors to sell its product in the same geographic territory as the distributor concerned

• Current Global Rule on Vertical Restraints: Price Restraints > Non-price restraints

  Generally, it appears that vertical PRICE restraints are of more concern than vertical non-price restraints, although both are superficially subject to the same RoR standard under SA 1.

• Colgate (US 1919) Stands for the distinction between

  [A] Permissible, unilateral insistence on retail price v [B] Impermissible, conspiracy to fix retail price.

• What case did Leegin (US 2007) kill?

  DR Miles (US 1911)

• Dr Miles (US 1911) - Overruled by Leegin, Khan

  While the technical holding was very narrow, all subsequent cases interpreted Dr Miles as stating a rule of per se illegality, at least as to minimum vertical price-fixing. In late decades, the rule was extended to maximum vertical price-fixing.