Longitudinal Geographic And Customer Restrictions The Protocol Study

Vertical Restriction Agreement on Territory and Customer (VRATC) refers to an agreement according to which the territory in which and the customer to whom the buyer can resale the goods is restricted. The research of VRATC is far from enough and some similar notions and misleading parlances shall be clarified first. VRATC is a conception better revealing the essence of this kind of vertical restriction.Through VRATC, the supplier can improve the salesman's incentive to promote the goods, prevent a salesman from free-riding the other salesman's efforts and enhance the inter-band competition of the goods so as to benefit the consumers. But in some circumstances, VRATC may also partition the market and undermine the competition. So careful analysis and study shall be conducted before determine the legitimacy of a particular VRATC.In short, some kinds of VRATC shall be forbidden in any cases, but most of VRATC can be allowed as long as the parties concerned is not dominant in the market or the market is open for any potential competitor or the customer has alternative choices for the specific goods concerned . When assessing the competitiveness of the market, the existence of non-price competition should be taken into account.China shall follow the European Community (EC) style rather than U.S. style to legislate on the issue of VRATC, this means many concrete provisions are needed to regulate the variety of VRATC. Some available provisions of EC as illustrated can be readily adopted in China.