ABSTRACT This article proposes a dynamic approach to modeling opportunism in bilateral vertical contracting between an upstream monopolist and competing downstream firms. Unlike previous literature on opportunism which has focused on games in which the upstream firm makes simultaneous secret offers to the downstream firms, we model opportunism as a consequence of asynchronous recontracting in an infinite‐horizon continuous‐time model. We find that the degree of opportunism depends on the absolute and relative reaction speeds of the different bilateral upstream–downstream firm pairs and on the firms' discount rate. Patience, fast reaction speeds, and asymmetries in reaction speeds across upstream–downstream pairs are shown to alleviate opportunism. Our results are relevant for vertical merger policy and for competition policy on vertical restraints.

This article analyses recent enforcement trends regarding vertical restraints within the EU and UK following the introduction of both the Vertical Block Exemption Regulation and the Vertical Agreements Block Exemption Order in 2022. In doing so, references are made to recent cases shaping the direction of the law in the area of vertical restraints, including the Super Bock and Valve Corporation cases. Trends are examined across key areas of enforcement, including (i) resale price maintenance, (ii) online sales and advertising restrictions, (iii) parity clauses, (iv) dual distribution and (v) territorial restrictions.

Vertical Restraints in an Amazon World <br>

The ongoing growth of e-commerce has been changing the incentives and character of interaction between market participants at different levels of the vertical production chain. During the last 10 years, these trends have been attracting the attention of European antitrust and became a productive area of economic research. The altering nature of competition and the role of market participants influenced by the development of digital platforms have become the reference point for the emerging of new varieties of vertical restraints such as cross-platform parity agreements (across-platforms parity agreements). These types of agreements creates new incentives for firms. This was a challenge for the European Commission in the light of the preparation of the next edition of regulatory documents determining the legality of the application of vertical restrictive agreements, such as Vertical Block Exemption Regulation - "VBER" and Vertical Guidelines – "Guidelines for the Regulation of vertical restrictive agreements". We find it extremely interesting to identify to what extent the final versions of these regulatory documents took into account the opinions of judges, market participants and the academic community, who actively participated in identifying the most complex aspects of vertical interaction between firms and the growing role of digital platforms in this interaction.

Journal Article Online Sales Restrictions and Platform Agreements under the New EU Antitrust Regime for Vertical Restraints Get access Johannes Holzwarth, Johannes Holzwarth Search for other works by this author on: Oxford Academic Google Scholar Kassiani Christodoulou, Kassiani Christodoulou Search for other works by this author on: Oxford Academic Google Scholar Marco Vischi Marco Vischi Search for other works by this author on: Oxford Academic Google Scholar Journal of European Competition Law & Practice, lpad042, https://doi.org/10.1093/jeclap/lpad042 Published: 06 October 2023 Article history Received: 05 September 2023 Accepted: 12 September 2023 Published: 06 October 2023

Post-fire properties of beam-slab specimens with different restraints on interior beams

Franchising is a business model that has been converting dozens ofintangible assets into tangible in the history of mankind. Thus, nowadays it byitself covers a wide range of institutional aspects of law and economics.Besides, a franchise runs according to Nash’s Equilibrium theory. A player canachieve the desired outcome by not deviating from their initial strategy. For thispurpose, the franchisor provides an amount of assistance to the franchisee instarting and managing the business activities.De facto, principles of equality are slightly different for franchise contracts.This is because the results of the contract cannot be achieved without the strictsupervision and advice of the license holder.Therefore, this short comparative research has considered legal and businessissues relating to franchise, including the main contract law requirements, thedisclosure obligation, patent protection, vertical restraints, and the generaleconomic outcome of franchising in some countries.

Most studies on supply chain coordination assume that consumers are rational. However, with the development of e-commerce, consumer-bounded rationality has become an important issue with respect to supply chain coordination. Based on the assumption that some consumers are loyal to the offline shop and others are reference-dependent, this article examines the mechanism of vertical restraints and their competitive effects. This research study found that compared with the assumption of rational consumers used in previous literature, vertical restraints help internalize the “channel price gap externality” when consumers are loss averse. When separately operating, the offline shop will set a higher price due to its consumers’ higher loyalty and willingness to pay. However, given the positive externality of this price to the online retail sales, the offline price is still lower than the level under vertical integration. When the upstream manufacturer achieves supply chain coordination with vertical restraint contracts, the channel price gap externality is internalized, and the channel price gap expands to stimulate loss-averse consumers’ purchasing decisions.

In the year of 2022 the European Commission adopted Regulation 2022/720 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to categories of vertical agreements and concerted practices as well as the accompanying Guidelines on vertical restraints. The adoption of the Regulation was necessary, primarily because of the changes in the market, which are reflected in the growth of e-commerce, intensive use of information technologies in the sale and distribution of goods and in providing services, the emergence of new types of vertical agreements, as well as the affirmation of certain business models. Regulation 2022/720 governs the block exemption of vertical agreements and applies to vertical agreements that contain vertical restraints. In this paper are analyzed vertical agreement and vertical restraint as key concepts of the Regulation 2022/720.

When Do Non-Price Vertical Restraints Become Unreasonable?

The goal of achieving and maintaining an integrated internal market is to strengthen competition in the European Union. Consequently, in conditions where the elimination of unfair competitive practices has been achieved at the level of the member states, companies cannot resort to prohibited vertical agreements, for which the provisions of art. 101 para. 1 of the Treaty on the Functioning of the European Union apply. However, Regulation (EU) 2022/720 regulates categories of vertical agreements and concerted practices that are not considered incompatible with the common market and the general interest of consumers. Thus, if a vertical agreement restricts competition within the meaning of art. 101 para. 1 of the Treaty, the agreement may still meet the exemption conditions set out in art. 101 para. 3, only under the conditions set out in this Regulation. In June 2022, the European Commission adopted the Communication “Guidelines on Vertical Restraints”, a document through which the EU institution provides businesses with guidelines on vertical agreements, how the provisions of art. 101 of the TFEU apply to vertical agreements, the positive and negative effects they have generated. Also, in the communication, the Commission refers to those vertical agreements that do not fall under Article 101(1) of the treaty, also providing explanations regarding the protection regime – “safe harbor” – established by Regulation (EU) 2022/720. All these issues will be analyzed in the present study from a personal perspective, substantiated by the legislation appropriate to the matter.

Abstract Innovation competition presents challenges for antitrust law and enforcement policy. Innovation has generated changes in the nature of competition as firms introduce new transaction techniques, product designs, and production processes. Innovation competition is driving the ‘Business Revolution’ in retail, wholesale, manufacturing, services, and financial technology. Transaction innovation in online platforms and multi-sided markets has raised antitrust concerns about anticompetitive conduct, vertical restraints, consumer privacy, and barriers to entrepreneurship. The article argues that although antitrust policy makers recognize the importance of innovation competition, they need to update their economic frameworks. Antitrust policy makers need to move beyond traditional analysis based on the twin frameworks of perfect competition and imperfect competition. The article provides an introduction to the emerging Economics of Technology & Innovation and examines some implications for antitrust policy. First, antitrust policy should shift its focus from price competition without technological change to address non-price aspects of innovation competition. Secondly, antitrust policy should apply economic analysis that recognizes the critical role of Intellectual Property and technology standards in innovation competition. Thirdly, antitrust policy toward horizontal and vertical mergers should consider developments in the economic analysis of innovation competition.

In a recent case (Judgment 2C_149/2018 of 4 February 2021), the Federal Supreme Court of Switzerland [hereafter: FSC] assessed the conditions under which a so-called ‘recommended price’ qualifies as an unlawful vertical agreement restraining competition within the meaning of the Swiss Federal Act on Cartels and other Restraints of Competition [hereafter: CartA].1 While ‘standard’ recommended prices are typically set out in catalogues or lists, the recommended price in the case at hand was communicated to the points of sale via an electronic database system. The price automatically appeared to a retailer when he or she scanned the barcode of the product. To the best of our knowledge, this situation differs from recommended price cases that have been assessed under EU law to date. In particular, cases in which a manufacturer or distributor communicates its recommended price to retailers directly via the operator of an electronic database system are not considered by the Commission either in the actual2 nor in the draft3 version of its Guidelines on vertical restraints. The FSC thinking for this type of recommended price is therefore potentially of great interest to European competition authorities and to the practice.

Vertical Restraints, Common Agency, and Information Transmission

Vertical restraints applied by major operators of digital markets have become a serious challenge for international regulators and governments of leading world powers in recent years. Having new specific features in comparison with the restraints in force in traditional sales channels, they can lead to a rapid strengthening of the market power of dominant online platforms and to the subsequent monopolization of markets. The article is devoted to the study of business practices of applying various types of vertical restraints in global digital markets. Using the example of global leading companies (Apple Inc., Amazon, Booking.com., Microsoft, etc.), the market consequences of the introduction of exclusive and related contracts, cross-platform parity agreements, as well as a wide range of transaction bans are demonstrated. In particular, suppliers and dealers are significantly limited in their ability to sell competing products and brands and list them on major online marketplaces. Bans are introduced on the use of Internet sites for price aggregation and comparison, as well as certain e-commerce platforms and certain types of payment means. At the same time, there are significant penalties for non-compliance with the terms of vertical contracts. Buyers and users are limited by the possibilities of using software products of independent developers, connecting to competing online services. Technological solutions are being introduced that increase the costs of sharing hardware and software of competing operators. And such solutions are greatly simplified in the conditions of existing “closed” global digital ecosystems. It is shown that the norms of vertical contracts of major market players are able to effectively eliminate the cost advantages of both existing operators and new firms, significantly increasing the entry costs and reducing potential of entering firms to attract the target audience at the start of activity. The most vulnerable here are, first of all, small highly specialized companies using low-budget business models. The author proposes a theoretical model that reveals the mechanism that prevents new firms from achieving the minimum effective sales volume. Using the example of the distributor’s retail price control strategy, it is proved that the use of vertical contracts allows both increasing the profits of existing operators and successfully preventing potential competitors from entering the market. At the same time, it is noted that the use of vertical restraints contributes to solving a number of current business problems of large digital companies: effective protection of investments in the development of e-commerce channels, limiting the turnover of counterfeit products, deepening the differentiation of market supply, reducing the risks of price wars and leveling the actual “stowaway problem”. Therefore, the qualification of vertical restraints as good practices, or as abuses of market power, should be based on an analysis of the objectives of such restraints and a comprehensive assessment of their potential consequences. An important step towards solving this complex and very sensitive problem may be the adoption of the Digital Markets Act by the European Parliament in 2023.

Vertical Restraints and Labor Markets in Franchised Industries

Poland ∙ The Office of Competition and Consumer Protection Investigates Vertical Restraints in the IT Sector - Does the EU Approach Prevail?

This article explores the law and economics of brand bidding restraints which constitute the most novel type of vertical restraints imposed by brand owners on their distributors in digital markets. The article tests and critically reflects on the restrictive approach European competition watchdogs have recently adopted towards these brand bidding restraints. It contends that this harsh antitrust treatment of brand bidding restraints is not sufficiently grounded in the economic analysis of vertical restraints. In proposing a comprehensive framework for the legal and economic analysis of brand bidding restraints, the article makes three principal contributions. First, it asserts that brand bidding restraints can have a number of procompetitive effects by internalizing advertising-related externalities, addressing free-riding on display and traditional advertising and facilitating fixed cost recovery through price discrimination. Second, the paper considers different ways through which brand bidding restraints may harm competition and consumer welfare when they disproportionately affect infra-marginal consumers, prevent meaningful intra- and inter-brand comparisons or result in price discrimination on the basis of search costs rather than brand preferences. Moreover, brand bidding restraints are of particular concern when adopted in the context of dual distribution systems where vertically integrated brand owners have an incentive to raise their retailers’ costs to prevent them from cannibalizing on their own sales channel. Third, the article explore various filters that may inform an effects-based analysis of brand bidding restraints. In this respect, the article makes a number of policy recommendations for the future antitrust analysis of brand bidding restraints. These proposals could also inform the ongoing revision of the Vertical Block Exemption Regulation (VBER) and Vertical Guidelines in the EU and in the UK. brand bidding restraints, vertical online search advertising restraints, digital vertical restraints, e-commerce sector inquiry, B2-98/11 Asics, Case COMP/AT.40428 Guess, vertical restraints, Vertical Guidelines, Vertical Block Exemption Regulation

Section F of the UN Set of Multilaterally Agreed Equitable Principles and Rules for the Control of Restrictive Business Practices (‘UN Set’) deals with international measures, including consultations and co-operation among competition authorities for enforcement against anti-competitive practices, particularly for developing countries’ benefit. The 2020 Eighth Review Conference on the UN Set adopted Guiding Policies and Procedures under section F (‘GPP’). While it contains few norms, this non-binding instrument provides principles and a pedagogical guide for enforcement co-operation, encourages positive responses to co-operation requests, and strengthens the consultations mechanism and the United Nations Conference on Trade and Development (UNCTAD) secretariat’s supporting role. The GPP’s siting within the UNCTAD and UN Set contexts provides legitimacy, inclusivity, mandates, resources, a secretariat – and thus the best available multilateral framework for developing and transition countries to mobilize publicity, dialogue, and persuasion to strengthen enforcement co-operation in this area for their benefit. The GPP therefore constitutes a breakthrough, while how far or when its potential will be fulfilled will depend upon the building-up of shared perceptions of common interest, mutual trust and mutual benefit among competition authorities- something which UNCTAD could promote through action at the national and international levels. Initial signs provide hope that good progress can be achieved. UN Set of Multilaterally Agreed Equitable Principles, Rules for the Control of Restrictive Business Practices, enforcement against anti-competitive practices, UN 2020 Eighth Review Conference, Guiding Policies and Procedures, UNCTAD, multilateral framework, vertical restraints, enforcement cooperation, developing countries

This paper maps out some of the vertical restraints in the online environment that are particularly relevant from the consumer perspective. This article focuses on some of the most contentious vertical restraints that directly involve prices, are particularly relevant for online commerce and are harmful to consumers – resale price maintenance, price parity clauses, dual pricing and bans on price comparison websites. We look at how these vertical restraints have been analysed in the EU to date and where we should go from here from a consumer perspective. Notwithstanding this limited focus, other vertical restraints—especially on online sales, selective distribution systems, or non-compete obligations—can also have strong anti-competitive effects and harm (final) consumers.