Vertical Restraints in the Spanish Steel Industry and Their Effects on Competition, 1906–1936

Unlike U.S. and British steel firms, Spanish steel manufacturers did not integrate their operations with wholesalers and retailers or distribute their output through the market. Instead, from 1928 onward, Spanish steel firms imposed various forms of vertical restraints on wholesalers, including exclusive dealing, stock quotas, and resale price maintenance. These restrictions prevented the iron and steel wholesalers, who banded together to form a cartel in 1910, from establishing their own pricing policies. In addition, the restrictions limited competition in the industry. After 1928, when the independent steel firms found it impossible to distribute their products through the main iron wholesalers, they had no choice but to join the Spanish steel cartel.