We investigate the circumstances affecting the emergence of Competitive Supply Relationships (hereafter, CSRs). CSRs are dyads whose actors have both buyer-seller relationships in a business context and competitive interdependences in another business context. More specifically, we focus on CSRs in which two firms have a buyer-seller relationship upstream, in the intermediate market, and compete against each other downstream, in the consumer market. We argue that CSRs raise a difficult conundrum. On one hand, CSRs imply proximity between the opposite sides of the dyad, which may lead to a learning benefit in the supply relationship context as proximity favors the ability of the actors to learn from each other. On the other hand, CSRs raise a rent appropriation issue, as the upstream partnering activities may constrain the ability of the actors to appropriate the rents generated downstream. We develop a set of propositions suggesting under which circumstances the inducements (learning benefits) are high and, at the same time, the risks (rent appropriation constraints) are low, hence we predict which factors make the CSRs more likely to form.