Vertical Restraints & Agreements

Vertical restraints, agreements and other business strategies may, depending on the facts, intensify competition, have anticompetitive effects, or even constitute monopolization. CRA helps clients, competition agencies, and courts understand the true nature and impact of such conduct. We clarify and quantify the impact of a wide array of vertical restraints (e.g., contractual restrictions that govern buyer pricing/loyalty rebates, exclusivity, and territories) by rigorously applying modern economic principles of contracting and appropriate statistical and econometrics tools.

CRA’s economists have pioneered the development of many of the key elements of contractual economics. To evaluate the competitive effects of vertical restraints, we have extensive experience in utilizing the requisite empirical tools and procedures, including contract simulation, critical elasticity studies, cost-justification assessments and market surveys, among others. We have analyzed many vertical restraints and agreement issues, including reasonableness of territorial and customer restrictions (e.g., exclusivities), competitive effects of termination and renewal provisions, appropriateness of discounts (including most favored nation clauses), allowances and other promotional practices, and the efficiency of after-market restrictions.