1. ICN 2015 Special Project Online Vertical Restraints Break Out Session 4 - Economic Framework May 1 st, 2015

2. Are the traditional economic tools appropriate and sufficient to analyze RPM in online markets? For RPM practices in general, Brazilian case law follow the guidelines established in the SKF trial (January 2013)  Theory of harm and competition environment –Brazil rely on international jurisprudence: between per se and rule of reason. –Presumption of illegality: when conduct involves communication or an agreement on prices between players in the chain RPM cannot be indicated by distributors –Cases involving minimum price or margin are the most suspicious –“De minimis” rule: manufacturer or distributor share < 20%; C4<75% –Otherwise: defendant has the burden of prove of efficiencies 2 Sources: ICN 2015 Online Vertical Restraints Special Project. ICN 2015 Economic framework for evaluating vertical restraints in online markets. OECD Policy Roundtables, Vertical Restraints for Online Sales, 2013.

3. Traditional tools must take into account the market dynamism  The main challenge to the analysis can be the competition environment and the relevant market definition –Dynamism can make boundaries flexible Innovative products or tools (e.g. apps) can emerge anytime Currently promising products and tools may disappear in a short time period –Off-line x online: products/services can be available on both systems  Online markets expand geographic market boundaries –Even off-line markets could be expanded. E.g. Brazilian merger case Via Varejo  The measurement of the market power, entry and rivalry can be jeopardized by a poor market definition 3 Sources: ICN 2015 Online Vertical Restraints Special Project. ICN 2015 Economic framework for evaluating vertical restraints in online markets. OECD Policy Roundtables, Vertical Restraints for Online Sales, 2013. Assessment under the rule of reason: intervention should not disrupt the market dynamism, which could harm fast-moving complex businesses that are not fully understood. E.g. high tech/luxury goods protecting its investments and brand reputation Without considering the dynamism of the online markets, RPM would be easily considered harmful