4th Competition Day 2010 Beograd, April 12, 2010 Resale Price Maintenance (RPM) Theodor Thanner, Director General Austrian Federal Competition Authority.

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Presentation transcript:

4th Competition Day 2010 Beograd, April 12, 2010 Resale Price Maintenance (RPM) Theodor Thanner, Director General Austrian Federal Competition Authority B UNDES W ETTBEWERBS B EHÖRDE

Outline of the presentation The starting points of the discussion The pros of RPM The cons of RPM How to deal with it? The approach taken by the new BER Some issues for discussion B UNDES W ETTBEWERBS B EHÖRDE

The starting points of the discussion In 1911 the US Supreme Court in „Dr Miles“ decided on the per se-illegality of RPM. From the 70s on this decision got more and more questioned (background: evolution of an effects-based approach in competition policy) Courts tried to „circumvent“ the severity of this judgement („Colgate“ case …) Finally on June 28, 2007 the Supr. Court made the rule of reason applicable („Leegin case“) B UNDES W ETTBEWERBS B EHÖRDE

The pros of RPM The core reasoning: RPM avoids double marginalisation (= both vertical contractors demand (monopoly) profits) RPM prevents free-riding (on quality, service etc. efforts) RPM as an incentive for market entry RPM enhances stock-keeping  Inter-brand competition is essential B UNDES W ETTBEWERBS B EHÖRDE

The cons of RPM The core reasoning: RPM is always about raising prices (minimum price fixing!), but competition aims at lowering prices (??). RPM strengthens up-stream market power RPM facilitates collusion (facilitates the monitoring of prices of competitors)  How important is intra-brand competition? B UNDES W ETTBEWERBS B EHÖRDE

How to deal with it? In 2007 the 1st Vienna Competition Confe-rence discussed several approaches, how to balance the pros and cons of RPM: Leave it with (almost a) per se prohibition Institute a safe harbour (market share threshold? enterprise size?) On a case by case basis Applying a rebuttable presumption B UNDES W ETTBEWERBS B EHÖRDE

The approach taken by the new BER The Commission as well as the majority of member states (we too) opted for a flexible and cautious approach in the new Block Exemption Regulation (BER): RPM is still dealt with as a hard core restriction in the regulation as such But in the (accompaning) guidelines also the possible benefits of RPM are taken into account B UNDES W ETTBEWERBS B EHÖRDE

Some issues for discussion What does case experience tell us? Which analytical methods should we apply in balancing the pros and cons? Are presumptions an appropriate tool for making enforcement more efficient? What could be the likely issues against the background of the structural features of the Serbian economy? B UNDES W ETTBEWERBS B EHÖRDE

Thank you for your attention ! B UNDES W ETTBEWERBS B EHÖRDE