Territorial restrictions on distributors : What is the limit of their legality? An analysis of the Brazilian, European and American experience

Abstract

The geographical allocation of distributors is a vertical practice that limits the distributor to operating in a certain territory and can generate anti-competitive effects, such as facilitating collusion between suppliers and making it difficult for competitors to enter. However, it can also bring
benefits by improving distribution systems, reducing free rider and hold up risks, and increasing inter-brand  competition. This article explores CADE's understanding of this conduct, suggesting that its analysis in Brazil still 
lacks maturity compared to international experience, especially when looking at the European Union and the United States, where the issue is dealt with in greater depth. In Brazil, CADE has analyzed the issue in a limited way, in a resolution that has already been revoked and in a specific
case involving public tenders. The study compares the limited Brazilian experience with international approaches, where territorial restrictions are often evaluated by the rule of reason, considering possible efficiencies. It concludes that the international experience offers lessons that can help CADE and the Brazilian antitrust community to develop a more robust analysis of possible risks associated with these practices, weighing their potential negative and positive effects.