Competitive Analysis of Supply Restrictions in Vertical Agreements: A Comparative Study in American, European Union, and Iranian Law

Document Type : Research Paper

Authors

1 Ph.D. in Private Law, Faculty of Law, Shahid Beheshti University, Tehran, Iran

2 Associate Professor in Department of Private Law, Faculty of Law, Shahid Behehshti University, Tehran, Iran

Abstract

Introduction: Supply restrictions represent a significant form of non-price restraint in vertical agreements. Under such arrangements, upstream firms impose limits on the quantity of products that may be sold, the extent of use, or the field of use for intellectual property across different levels of distribution and production in product, technology, and innovation markets. These restrictions are suspected of having both pro-competitive and anti-competitive effects, making a conclusive competitive assessment—particularly within Iran's specific economic context—complex and necessitating the intervention of competition law. While the legal frameworks of the United States and the European Union evaluate such restrictions against clear criteria and specific provisions that account for intellectual property standards, Iran's competitive framework for these practices remains ambiguous due to incomplete regulations and an underdeveloped jurisprudence. This article employs a comparative study of U.S. and E.U. approaches to elucidate the competitive consequences and
evaluation criteria for supply restrictions, to propose appropriate legal solutions for the Iranian legal system.
The central research questions addressed are: What challenges do these intentionally restrictive practices pose to the competitive environment and consumers in product, technology, and innovation markets? By what criteria can illegitimate applications be distinguished from legitimate ones?
 Method: Utilizing a descriptive and analytical methodology, this article examines the fundamental standards and legal approaches of the United States and the European Union. It explains the concept of supply restrictions across the three markets and analyzes the competitive implications of such clauses in vertical agreements.
 Findings: The comparative study reveals that both the U.S. and European legal systems typically apply a rule-of-reason analysis to evaluate these limitations, recognizing their potential efficiencies and granting exemptions under certain conditions. In contrast, despite the issue's importance, Iranian law lacks specific provisions for supply restrictions. The Iranian legislator does not possess a comprehensive policy; rather, it prohibits supply restrictions only when deemed detrimental to competition and implemented by a dominant economic firm, without regard for the specific requirements of technology and innovation markets.
 Conclusion: The article concludes by examining relevant Iranian laws and regulations to identify their stance on the issue. It proposes that Iran's legal framework should be amended to balance the interests of competitive markets and intellectual property rights. This can be achieved by establishing legal exemptions that maintain market competition while fostering continued creative activity.

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References

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