Resale Price Maintenance: What Future, What Past?

Varun Chakravarty

doi:10.2139/ssrn.3388105

Abstract

The paper deals with a comprehensive analysis of the evolution of vertical price restraints in the American, European and Indian market. Resale price maintenance refers to the efforts of a manufacturer to restrict the range of prices charged by a retailer of the manufacturer’s product. In this paper there will be an analysis of evolution of resale price maintenance in US with the inception of Sherman Act to Leegin Creative Leather case for maximum and minimum resale price maintenance. There will also be an analysis of evolution of US competition law from Per-se to Rule of reason with regard to incident of checking the anti-competitive market practice. A detailed analysis with respect to US, EU and Indian stand on competition law will be given in this research paper.

Highlights

A resale price maintenance (RPM) agreement is a contract in which a manufacturer and a downstream distributor agree to a minimum or maximum price the retailer will charge its customers (Mills and Elzinga 2008, 1841-1858)
Resale price maintenance can only be of concern when the competition among brands is not sufficient, which means that there is an unusual share of market power being held by either the retailer or supplier
If market is filled with many firms competing with each other which will result in an decentralized market and an absence in anti competitive effects in the market

Summary

Introduction

A resale price maintenance (RPM) agreement is a contract in which a manufacturer and a downstream distributor (retailer) agree to a minimum or maximum price the retailer will charge its customers (consumers) (Mills and Elzinga 2008, 1841-1858). Resale price maintenance can increase sales and create brand image by imposing certain standards of quality on the distributors in result of which there will be an increase in competition among inter-brands by providing services.

Results

Conclusion