Resale Price Maintenance and Vertical Territorial Restrictions

Resale Price Maintenance and Vertical Territorial Restrictions

Theory and Practice in EU Competition Law and US Antitrust Law

New Horizons in Competition Law and Economics series

Barbora Jedlicková

Theoretical discussions among competition lawyers and economists on the approach to Resale Price Maintenance (RPM) and Vertical Territorial Restrictions (VTR) have often caused controversy. However, commentators agree that there is a lack of comprehensive study surrounding the topic. This book explores these two forms of anticompetitive conduct from legal, historical, economical, and theoretical points of view, focusing on the EU and US experiences.

Chapter 7: Conclusion

Barbora Jedlicková

Subjects: law - academic, competition and antitrust law

Extract

The discussion in this book leads to the conclusion that both extremes, either the absolute prohibition or absolute legalization, including the de facto legalization, of RPM and VTR would not reflect the nature of these restrictions, nor would it be the right approach to serve justice under competition/antitrust law. This conclusion is supported by both the outcome- and process-orientated approaches. The outcomes of RPM and VTR show that both of these vertical restraints can have procompetitive explanations in some cases, while in other cases they can restrict competition, primarily intrabrand competition. Such a restriction can lead to increased prices and, based on a case-by-case evaluation, other restrictive, anticompetitive results, such as decreased consumer welfare, efficiency and even interbrand competition. By protecting the competitive process, the process-orientated, deontological approach protects all forms of competition, including intrabrand competition, and provides a limited number of situations where RPM or VTR should be allowed. Situations such as these include when the principle of proportionality does not offer less restrictive and more efficient options to solve the problem of penetrating the market, thus increasing competition, or where the fair distribution of benefits is hindered due to the problem of genuine free riding. Although justification should be allowed if it forms a true reason for introducing RPM or VTR in an individual case, determining how often these procompetitive situations occur in practice remains a complex and complicated empirical question. Competition law and policy regimes can implement a variety of models.

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