Vertical Restraints: Federal Court of Appeals Decisions (Litigator Series)

This ebook contains selected decisions of the Federal Courts of Appeals that analyze whether certain business arrangements constitute vertical restraints in violation of the Sherman Act.

Vertical restraints are competition restrictions in agreements between firms or individuals at different levels of the production and distribution process. Vertical restraints are to be distinguished from so-called "horizontal restraints,” which are found in agreements between horizontal competitors. Vertical restraints can take numerous forms, ranging from a requirement that dealers accept returns of a manufacturer’s product, to resale price maintenance agreements setting the minimum or maximum price that dealers can charge for the manufacturer’s product.

In analyzing the economics of any given restraint, and determining thereby which kind of legal treatment it merits, it is vital to distinguish between horizontal restraints that involve direct competitors at a given level of the market, and vertical restraints that typically involve entities that are upstream or downstream of one another. Under Section 1 of the Sherman Act, certain horizontal agreements are viewed as especially injurious, and courts therefore bar them per se, regardless of any alleged ameliorative rationale. Expert Masonry, Inc. v. Boone County, Ky., 440 F. 3d 336 - Court of Appeals, (6th Circuit 2006).