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

2. Antitrust Section Corp. Legal, 22 May 2009 2 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

3. Antitrust Section Corp. Legal, 22 May 2009 3 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

4. Antitrust Section Corp. Legal, 22 May 2009 4 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?

5. Antitrust Section Corp. Legal, 22 May 2009 5 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

6. Antitrust Section Corp. Legal, 22 May 2009 6 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

7. Antitrust Section Corp. Legal, 22 May 2009