Vertical agreements between suppliers and retailers that specify a relative price relationship between competing products or competing retailers

This report summarises the economic theory and case law as it relates to recent cases involving vertical agreements specifying horizontal price links. We first identify two classes of vertical restraints with horizontal effects, by reviewing existing case law, and show that they can be analysed using the same logic. We demonstrate that the horizontal link, although commonly referred to as a most favoured nation guarantee, is actually more akin to a price matching guarantee. Building on this, we review the main insight from the well-established literature on price guarantees to demonstrate that there was good reason for competition authorities to scrutinise recent on-line market cases. We then summarise the main insights from the very recent academic economics literature which, based on case law, has focused directly on vertical agreements specifying horizontal price links. The report concludes with recommendations arising from our existing insights and points to areas where more research is needed