Maureen McGuirl On Vertical Agreements For The Small-Firm Practitioner

Maureen McGuirl On Vertical Agreements For The Small-Firm Practitioner

In this Emerging Issues commentary, Maureen McGuirl discusses conduct that presents antitrust risks for attorneys when reviewing contracts or business practices and otherwise advising clients. Ms. McGuirl sets out a frame work to help attorneys recognize this conduct when considering vertical agreements on price. She writes:

"While less fraught with antitrust exposure than contacts with competitors, relations between suppliers and customers can present antitrust risk. Agreements between suppliers and customers (vertical restraints) are judged under the rule of reason.

"Whether a resale price agreement is lawful will depend on whether its net competitive effect is anticompetitive or precompetitive. In making this assessment, the key issue will be whether interbrand competition is promoted.

"In advising clients on the advisability of participating in a vertical agreement setting resale prices, counsel should inquire into the source of the agreement, that is, whether it results from an agreement among manufacturers, among distributors or among retailers. (If a horizontal agreement exists, the enforcement authorities or plaintiffs probably would argue that there is a horizontal agreement on prices that is per se illegal.) Counsel also should determine if the person imposing the agreement has market power and the reasons for its decision. Counsel also should ask if RPM is widely used in the industry."

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