Discuss arguments for the application of rule-of-reason standard and the per se standard to vertical territorial restraints

What will be an ideal response?

Those urging that a rule-of-reason standard be applied to such territorial restraints can argue that they encourage economic efficiencies and thus provide for spirited inter-brand competition. Vertical restraints allow a manufacturer to concentrate its advertising and distributional programs on one or two retailers in a location, making it better able to compete at the retail level with different brand manufacturers of the same product. Customer restrictions are also beneficial, in this view, because they enable a manufacturer to give better service and to cut out the costs of distributors' and retailers' services. For example, a manufacturer may reserve certain large commercial customers for itself, selling directly to them in large quantities and disallowing retailer involvement with them.
Those arguing that a per se standard should be applied to vertical territorial restraints can suggest not only that intra-brand competition is enhanced by this approach, but also that customers are better able to compare the prices charged by different retailers selling the same brand. They can argue that the elimination of intra-brand competition reduces the number of sellers of a leading brand in a market and increases overall market concentration in the product.