Horizontal and Vertical Restraints

Horizontal restraints occur when companies at the same level of the supply chain, like competitors, agree to limit competition among themselves, often through price-fixing or market division. This can reduce choices and increase prices for consumers. Vertical restraints involve companies at different levels of the supply chain, such as manufacturers and retailers, coordinating to control aspects like pricing or distribution. While some vertical restraints can enhance efficiency, others may restrict competition and harm consumers. Both types of restraints can raise legal concerns under antitrust laws designed to promote fair competition.