Our team has extensive experience in analysing the effects of horizontal and vertical agreements. We assist clients with contract design and risk assessment, as well as in formal proceedings before competition authorities and courts.
Agreements between firms can give rise to beneficial outcomes for customers but some can cause consumer detriment. Our team has extensive experience in analysing the economic effects of horizontal and vertical agreements, identifying competition risks and potential customer benefits.
Certain types of horizontal agreements between rivals, such as attempts to co-ordinate prices and output, are generally prohibited. In other circumstances – for instance, where logistical coordination is required to use capacity more effectively and so save costs – such agreements may give rise to positive outcomes for consumers. To distinguish beneficial from detrimental outcomes, economic analysis is increasingly used in the competitive assessment of horizontal agreements.
Similarly, vertical agreements between firms at different levels of the supply chain can also have beneficial or detrimental outcomes for competition and consumers. Benefits can result from improved incentives to develop and distribute products – which often requires material investment – reducing free-rider effects, avoiding hold-up problems and encouraging parties to invest. However, competition authorities may also be concerned about the potential for such agreements to foreclose rivals or foster collusion.