Vertical vs. Horizontal Restraints

Vertical restraints are restrictions imposed by a manufacturer or brand on its distributors or retailers, such as setting minimum resale prices or limiting where products can be sold. Horizontal restraints occur between competitors at the same level, like two car manufacturers agreeing not to compete on pricing or market share. While vertical restrictions often aim to maintain quality or brand standards, horizontal restraints can reduce competition directly. Both types impact market dynamics and consumer choice, and their legality depends on the context and intent, with authorities scrutinizing them to promote fair competition.