The Regional Competition Center for Latin America Presents: White Paper on Vertical Restraints

The Regional Competition Center for Latin America Presents: White Paper on Vertical Restraints – Michael A. Salinger (Senior academic adviser, Competition Practice, CRA) and Alexander Elbittar (Associate Professor, Center for Economics Research and Teaching)

Vertical restraints are one of the most difficult areas of antitrust law. Theories exist for how vertical restraints can be either procompetitive or anticompetitive. Ideally, policy makers would like a set of empirical methods to distinguish between the competing hypotheses on a case-by-case basis, but the empirical tools to do so are not as well developed with respect to vertical restraints as they are, say, for market definition in merger analysis.

Without such tools, policy-makers would like a reliable body of evidence about the relative frequency of procompetitive and anticompetitive uses of different vertical restraints. While some evidence is available, it is highly imperfect. But policy makers have to make decisions in real time. Recognizing the limitations of our current knowledge is an important step in formulating a rational policy toward vertical restraints.

This white paper seeks to distill the insights from the academic literature and the experience in other jurisdictions, both to suggest what constitutes current best practices with respect to vertical restraints and to explain areas of disagreements where controversy remains about what consti