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Se Hoon Bang and Yangsoo Jin

The authors examine the competition effect of resale price maintenance (RPM) in a market environment where multiple producers are involved and where free-riding by distributors on presale services matters. The “Guidelines on Vertical Restraints” in the European Union, which is frequently used for guidance in RPM assessment in Korea, emphasizes the anticompetitiveness of RPM in multiple-producer environments, while stressing procompetitiveness for RPM with free-riding concerns. The authors shows that these two market conditions, if they exist at the same time, interact to determine the competition effect of RPM. In this case, RPM may either harm or benefit consumers depending on the degree of the brand-specificity of presale services and the cost of service provision. The authors suggest points that should be considered in the assessment of individual RPM cases.