Joost Haans Antitrust Section Corp. Legal 22 May 2009 Resale Price Maintenance - Time for change? -

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Joost Haans Antitrust Section Corp. Legal 22 May 2009 Resale Price Maintenance - Time for change? -

Antitrust Section Corp. Legal, 22 May De facto illegality of RPM under EC Competition Law Commission unwilling to accept that RPM can in practice qualify for Article 81(3) EC  “RPM does not entail positive effects, and if it does these do not outweigh negative effects, or RPM will not be indispensable in achieving these objectives” Hardcore restriction -No De Minimis exception -Entire agreement outside VBER regardless of market share

Antitrust Section Corp. Legal, 22 May EC Commission’s position is inconsistent with its general competition law policy Focus normally on interbrand competition Article 82 – Rule of Reason approach Different views EU Member States Apparent low enforcement priority

Antitrust Section Corp. Legal, 22 May Why is RPM considered harmful? Keeps prices “artificially” high  Does this rule out Art. 81(3) EC? Retailers should be free to set their own prices  But what about maximum resale prices? RPM may reduce dynamism and innovation at the distribution level  Does this extend beyond price discounters? Risk of collusion  Even in case of low market shares?

Antitrust Section Corp. Legal, 22 May Beneficial Aspects of RPM Addresses “free rider” problem  This problem has been recognised. Alternative solutions may be unable to address the issue or create other competition concerns Stimulates non-price competition  E.g. competition on quality, service. Facilitates market introduction  Promotes innovation and interbrand competition Avoids product being used as “loss leader”  RPM can avoid competition problems resulting from selling at a loss

Antitrust Section Corp. Legal, 22 May Suggested changes regarding RPM treatment No longer qualify as hardcore restriction  Benefit from De Minimis Notice  VBER market share threshold applies to RPM  VBER not lost for the entire agreement if RPM falls outside VBER Above De Minimis RPM can be allowed for limited duration (cf. non- compete obligation) Commission should give clear guidance as regards efficiencies

Antitrust Section Corp. Legal, 22 May 2009