Vertical Restraints in Global Digital Markets

DOI: 10.20542/0131-2227-2022-66-5-23-31
A. Zazdravnykh,
Lomonosov Moscow State University, Faculty of Economics, 3rd training build., Leninskie Gory, Moscow, 119991, Russian Federation.

Received 27.01.2022. Revised 18.02.2022. Accepted 04.03.2022.

Abstract. Vertical restraints applied by major operators of digital markets have become a serious challenge for international regulators and governments of leading world powers in recent years. Having new specific features in comparison with the restraints in force in traditional sales channels, they can lead to a rapid strengthening of the market power of dominant online platforms and to the subsequent monopolization of markets. The article is devoted to the study of business practices of applying various types of vertical restraints in global digital markets. Using the example of global leading companies (Apple Inc., Amazon,, Microsoft, etc.), the market consequences of the introduction of exclusive and related contracts, cross-platform parity agreements, as well as a wide range of transaction bans are demonstrated. In particular, suppliers and dealers are significantly limited in their ability to sell competing products and brands and list them on major online marketplaces. Bans are introduced on the use of Internet sites for price aggregation and comparison, as well as certain e-commerce platforms and certain types of payment means. At the same time, there are significant penalties for non-compliance with the terms of vertical contracts. Buyers and users are limited by the possibilities of using software products of independent developers, connecting to competing online services. Technological solutions are being introduced that increase the costs of sharing hardware and software of competing operators. And such solutions are greatly simplified in the conditions of existing “closed” global digital ecosystems. It is shown that the norms of vertical contracts of major market players are able to effectively eliminate the cost advantages of both existing operators and new firms, significantly increasing the entry costs and reducing potential of entering firms to attract the target audience at the start of activity. The most vulnerable here are, first of all, small highly specialized companies using low-budget business models. The author proposes a theoretical model that reveals the mechanism that prevents new firms from achieving the minimum effective sales volume. Using the example of the distributor’s retail price control strategy, it is proved that the use of vertical contracts allows both increasing the profits of existing operators and successfully preventing potential competitors from entering the market. At the same time, it is noted that the use of vertical restraints contributes to solving a number of current business problems of large digital companies: effective protection of investments in the development of e-commerce channels, limiting the turnover of counterfeit products, deepening the differentiation of market supply, reducing the risks of price wars and leveling the actual “stowaway problem”. Therefore, the qualification of vertical restraints as good practices, or as abuses of market power, should be based on an analysis of the objectives of such restraints and a comprehensive assessment of their potential consequences. An important step towards solving this complex and very sensitive problem may be the adoption of the Digital Markets Act by the European Parliament in 2023.

Keywords: vertical agreements, vertical restraints, digital markets, exclusive contracts, cross-platform parity agreements, retail price control, market monopolization, barriers to entry, competition policy


  1. Helfrich M., Herweg F. Context-Dependent Preferences and Retailing: Vertical Restraints on Internet Sales. Journal of Behavioral and Experimental Economics, 2020, vol. 87. DOI: 10.1016/j.socec.2020.101556
  2. Bedre-Defolie Ö., Biglaiser G. Contracts as a Barrier to Entry in Markets with Non-Pivotal Buyers. merican Economic Review, 2017, vol. 107, no. 7, pp. 2041-2071. DOI: 10.1257/aer.20151710
  3. Clough D. Law and Economics of Vertical Restraints in Australia. Melbourne University Law Review, 2001, vol. 25, no. 3, pp. 551-622.
  4. Rey P., Vergé T. Economics of Vertical Restraints. Handbook of Antitrust Economics. Cambridge, London, The MIT Press, April 2008, pp. 353-390.
  5. Salop St. The 2020 Vertical Merger Guidelines: A Suggested Revision. Georgetown Law Faculty Publications and Other Works 2245. 2020, 26 March. 21 p. Available at: (accessed 21.09.2021).
  6. Harbord D., Hoehn T. Barriers to Entry and Exit in European Competition Policy. International Review of Law and Economics, 1994, vol. 14, no. 4, pp. 411-435. DOI: 10.1016/0144-8188(94)90024-8
  7. Gavin S., Ross T. Long-Term Contracts as Barriers to Entry with Differentiated Products. International Journal of Industrial Organization, 2018, July, vol. 59, pp. 514-537. DOI: 10.1016/j.ijindorg.2018.05.004
  8. Aghion Ph., Bolton P. Contracts as a Barrier to Entry. The American Economic Review, 1987, June, vol. 77, no. 3, pp. 388-401.
  9. O’Brien D. The Economics of Vertical Restraints in Digital Markets. The Global Antitrust Institute Report on the Digital Economy, 11.11.2020, no. 9. 66 p. DOI: 10.2139/ssrn.3733686
  10. Evans D. Vertical Restraints in a Digital World. Global Economics Group, 24.03.2020. 35 p. Available at: (accessed 21.08.2021).
  11. Jullien B., Sand-Zantman W. The Economics of Platforms: A Theory Guide for Competition Policy. TSE Digital Center Policy Papers Series, 2019, no. 1. 41 p. DOI: 10.2139/ssrn.3502964
  12. Spector D. Exclusive Contracts and Demand Foreclosure. RAND Journal of Economics, 2011, vol. 42, no. 4, pp. 619-638. DOI: 10.1111/j.1756-2171.2011.00147.x
  13. González X. Empirical Regularities in the Vertical Restraints of Manufacturing Firms. Atlantic Economic Journal, 2015, June, vol. 43, no. 2, pp. 181-194. DOI: 10.1007/s11293-015-9452-8
  14. Prieger J., Hu W. Applications Barriers to Entry and Exclusive Vertical Contracts in Platform Markets. Economic Inquiry, 2012, vol. 50, no. 2, pp. 435-452. DOI: 10.1111/j.1465-7295.2010.00355.x
  15. Mansour A. Identifying the Exclusionary Effect of Across-Platform Parity Agreements: Testing the Tests. The Antitrust Bulletin, 2018, vol. 63, no. 2, pp. 246-272. DOI: 10.1177/0003603X18770065


  1. Coronavirus Adds $105 Billion to US Ecommerce in 2020. Digital Commerce 360 Staff, 16.06.2021. Available at: (accessed 15.02.2022).
  2. Final Report on the E-commerce Sector Inquiry. Brussels, European Commission, 2017. 16 p. Available at: (accessed 15.02.2022).
  3. Guidelines on Vertical Restraints. Brussels, European Commission, 2010. 65 p. Available at: (accessed 05.09.2021).
  4. Implications of E-commerce for Competition Policy – Background Note. Paris, OECD, 2019. 61 p. Available at: (accessed 11.07.2021).
  5. Rethinking Antitrust Tools for Multi-Sided Platforms. Paris, OECD, 2018. 230 p. Available at: (accessed 11.07.2021).
  6. Regulation of the European Parliament and of the Council on Contestable and Fair Markets in the Digital Sector (Digital Markets Act). Brussels, European Commission, 15.12.2020. Available at: (accessed 21.09.2021).

Registered in System SCIENCE INDEX

For citation:
Zazdravnykh A. Vertical Restraints in Global Digital Markets. World Eonomy and International Relations, 2022, vol. 66, no. 5, pp. 23-31.

Comments (0)

No comments

Add comment






Dear authors! Please note that in the VAK List of peer-reviewed scientific journals, in which the main scientific results of dissertations for the degree of candidate and doctor of sciences should be published for the “MEMO Journal” the following specialties are recorded:
economic sciences:
5.2.5. World Economy.
5.2.1. Economic Theory
5.2.3. Regional and Branch Economics
political sciences:
5.5.4. International Relations
5.5.1. History and Theory of Politics
5.5.2. Political Institutions, Processes, Technologies


Current Issue
2024, vol. 68, No. 7
Topical Themes of the Issue:
  • The Supporting Structure of Global Security
  • Institutional Features of the Fourth Energy Transition
  • The Evolution of Modern German Christian Democracy
  • The Monarchies of the Persian Gulf and Central Asia
Submit an Article
The Editorial Board invites authors to write analytical articles on the following topics:
  • changes in the processes of globalization in modern conditions
  • formation of the new world order
  • shifts in civilization at the stage of transition to a digital society

The editors are also interested in publishing synthesis articles / scientific reviews revealing the main trends in the development of certain regions of the world - Latin America, Africa, South Asia, etc.