Mongolian Appellate Court Rules on Retail Price Fixing

The Appellate Court of Administrative Disputes in Mongolia has overturned a lower court's decision regarding a case of retail price fixing by a manufacturer, M LLC. The ruling addresses the legality of contractual agreements that set retail prices for distributors.

Case Background

M LLC, a manufacturer, had entered into contracts with distributors that specified retail prices for its products. The First Instance Court initially ruled in favor of M LLC, stating that such agreements did not violate competition laws.

Appellate Court's Findings

Upon appeal, the Appellate Court determined that:

• While manufacturers can set wholesale prices, fixing retail prices through contracts restricts distributors' ability to compete independently, thereby violating competition laws.
• Such agreements constitute a vertical cartel, a common form of price-fixing arrangement between manufacturers and distributors.

Implications

This ruling emphasizes the importance of maintaining competitive practices in Mongolia's market and serves as a precedent for future cases involving price-fixing agreements. Businesses are advised to review their contractual practices to ensure compliance with competition laws.