Horizontal agreements dividing markets are per se unlawful. Vertical territorial restraints imposed by a supplier on distributors are analyzed under the rule of reason.
Customer allocation and territorial allocation are equivalent.
Alternative Names:
Market Division|Territorial Allocation
Why it Matters?
The horizontal and vertical distinction determines the applicable standard entirely, and characterizing a restraint as vertical, imposed by a supplier rather than agreed among competitors, moves it from per se condemnation to rule of reason analysis where procompetitive justifications become available. Dual distribution arrangements where a supplier also competes at the distribution level complicate the characterization and are litigated on that basis.
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Related terms
Frequently asked questions
What determines the applicable standard?
What complicates the characterization?
