Vertical price-fixing occurs when manufacturers and retailers collaborate to establish a predetermined price for a product, thereby controlling its resale price. This differs from horizontal price-fixing, where competitors at the same level, such as retailers, agree to set a fixed price for a product. Price-fixing is considered illegal as it contradicts the principles of a free market and can have detrimental effects on the economy.
Vertical price-fixing occurs when parties within the same distribution chain, such as manufacturers and retailers, attempt to regulate the resale price of a product. This differs from horizontal price-fixing, which involves competitors at the same level, such as retailers within an industry, colluding to set prices. Price-fixing involves artificially establishing or maintaining prices at a specific level, which contradicts the principles of a free market. It is typically illegal under antitrust laws as it eliminates price competition and can have negative effects on the economy. For instance, if a manufacturer of a popular sneaker brand instructs retailers to only sell their sneakers at a predetermined price, this constitutes vertical price-fixing. The manufacturer aims to control the resale price and eliminate price competition among retailers, potentially resulting in higher prices for consumers and detrimental effects on the economy.
Vertical price-fixing occurs when a manufacturer or supplier sets the price at which retailers or distributors can sell their products.
Yes, vertical price-fixing is illegal under antitrust laws as it can harm competition and result in higher prices for consumers.
Setting a minimum price for retailers to sell products is considered vertical price-fixing and is generally illegal.
While a manufacturer can suggest a retail price to retailers, they cannot enforce or pressure retailers to sell at that price.
Offering incentives to retailers to sell at a certain price can be considered illegal if it results in price-fixing or anti-competitive behavior.
Terminating a retailer for selling below a certain price can be considered illegal if it is found to be a form of vertical price-fixing.
Setting different prices for different retailers can be legal as long as it does not result in anti-competitive behavior or harm competition.
Setting a maximum price for retailers to sell products is generally legal as it does not restrict competition.
Collaborating with retailers to set prices can be considered illegal if it results in price-fixing or anti-competitive behavior.
Engaging in vertical price-fixing can result in legal action, fines, and damage to a company’s reputation.
This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.
This glossary post was last updated: 17th April 2024.
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