Theory and Practice in EU Competition Law and US Antitrust Law
New Horizons in Competition Law and Economics series
Chapter 1: Introduction
Resale price maintenance, vertical territorial restraints and other vertical restraints have the ability to restrict competition in a primarily vertical fashion. They involve arrangements on a vertical chain, such as bilateral agreements between a manufacturer and a retailer. In contrast with horizontal collusion, vertical agreements are common and essential in a market consisting of bilateral or even multilateral arrangements. Nevertheless, such arrangements can include restrictive aspects which can lessen competition, primarily, intrabrand competition. Based on the European Union (EU) approach, some forms of resale price maintenance and vertical territorial restraints have the potential to be the most restrictive forms of vertical restraints. Resale price maintenance (RPM) includes the practice of a seller and her buyers ‘agreeing’ that the latter will sell her product at, above or below a set price. Vertical territorial restraints (VTR), or vertical market allocation, include territorial arrangements between a seller and her buyers where the buyers are allowed to sell only within certain territories. Throughout this book, I use the abbreviations of RPM for vertical minimum price and vertical price fixing and VTR for absolute territorial restrictions and exclusive territories (thus focusing on the most serious forms of vertical territorial restraints and resale price maintenance) unless expressly stated otherwise. Despite the fact that vertical restraints form part of potential anticompetitive practices in many competition/antitrust law regimes, including the EU regime and the regime of the United States of America (US), opinions on their potential anticompetitive effects differ. Indeed, RPM and VTR are controversial topics and their approaches differ in the EU and US.