Edited by John Duns, Arlen Duke and Brendan Sweeney
Chapter 10: Vertical conduct: Resale price maintenance
There are various forms of resale price maintenance. Once an independent distributor (a wholesaler or a retailer), as opposed to a commercial agent selling on behalf of his principal, purchases a product from a manufacturer for the purpose of resale, as the owner of the product, he is generally free to resell the product to his customers at the price that he deems fit. But a producer may in his contractual relationships with his distributors insert clauses or impose obligations by which he exerts a degree of control over the prices charged by the resellers for these products. This is known as resale price maintenance (RPM), some forms of which give rise to serious competition concerns. One should distinguish between ‘fixed’ RPM and ‘recommended’ RPM. Fixed RPM occurs where the producer actually sets the price that the distributor should charge when reselling his product and the distributor is obliged to comply;while recommended RPM occurs where the producer merely recommends the price but the distributor remains free to charge a lower or higher price. Two other forms of RPM are ‘minimum’ RPM and ‘maximum’ RPM where, in the former case, the producer obliges the distributor not to sell below a certain price and, in the latter case, not to sell above a certain price so that the distributor retains the freedom to sell above or below the price set by the producer, as the case may be.
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