vertical agreement investment & finance definition

An agreement between a buyer and seller operating at different levels of the production or distribution chain that potentially can violate antitrust laws. An example of a potentially illegal vertical agreement would be a retail store that has an agreement to buy from one manufacturer and is restricted in its ability to buy from others. Price-related agreements are presumed to be violations. However, most non-price agreements are viewed with less suspicion by antitrust authorities because many have valid business purposes. An example of a vertical agreement that may be legal would be a manufacturer that sells goods to a wholesale distributor who in turn sells those goods to a retail store that then sells it to the public.