Vertical Agreement Law and Legal Definition
Vertical Agreement is an agreement for co-operation between two or more competing businesses operating at different levels of production or distribution chain in the market. For example, a vertical agreement could be between a manufacturer, distributor and a retailer. These agreements are generally illegal because they may eliminate competition, create a monopoly, artificially raise prices or otherwise adversely affect free market. If the agreements are in the best interest of the parties and the public they may be declared reasonable.
Vertical price fixing is an arrangement associated with vertical agreements. Courts have held that vertical maximum price fixing, is subject to the antitrust laws and should be evaluated under the rule of reason.