Vertical Restraints Versus Horizontal Agreements In The Manufacturer – Distributor Relationship

By John Jiong Gong and Vanessa Yanhua Zhang –

Since the enforcement of the Anti-Monopoly Law (“AML”) in China, there have been several high-profile antitrust litigations involving vertical restraints in the manufacturer-distributor relationship. In China vertical restraints are also called vertical monopoly agreements in the context of the AML. In 2013, the Shanghai Higher Court set precedence of applying the “rule of reason” doctrine in the cases involving vertical monopoly agreements, as opposed to the more common “per se illegal” doctrine that is widely applied in situations of vertical monopoly agreements in China. This article addresses recent cases that blur the boundary between vertical and horizontal monopoly agreements in manufacturer-distributor relationships.