Non-Price Vertical Restraint

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Definition: Non-Price Vertical Restraint

Non-Price Vertical Restraint is an agreement, mostly a malpractice, where price fixing is done in a supply chain in order to minimize open competition, which in turn affects the overall market dynamics like price, demand-supply etc of the products and services.

This tends to affect the market scenario by altering the levels of production and the overall supply chain process. It may be an agreement that requires dealers to accept returns of a manufacturer’s product or resale price maintenance agreements which sets the minimum or maximum price that dealers can charge for the manufacturer’s product.

It can classified as two types i.e. intra band restraints where prices are adjusted of that same company. Interbrand is when the same is done between the prices of two competing companies.

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