Minimum resale price maintenance can reduce prices

Abstract Computational antitrust, the data-driven investigation of potential antitrust violations, has found more and more applications in recent years, including through the use of machine learning. However, the availability of labelled data to train algorithms proves to be an obstacle. In this paper, we explore the use of unsupervised machine learning to detect resale price maintenance (RPM) in price data. We develop assumptions that RPM prices exhibit increased similarity, a right-skewed distribution including a cut-off point, and fewer price changes over time compared with non-RPM prices. Based on these assumptions, we extract features based on simple statistical coefficients and perform clustering to detect products with price characteristics consistent with RPM. Subsequently, this can serve as a sufficient basis to conduct more in-depth antitrust investigations. We test our approach on five real-world product datasets scraped from a price comparison website. We show that our screen successfully clusters products with price patterns indicative of RPM.

The Efficiency and Limits of Price Strategy Regulation under the Fair Trade Act: Focusing on Unfair Discount Sales and Resale Price Maintenance

Resale price maintenance is not necessarily a restriction of competition ‘by object’: Case C-211/22 <i>Super Bock Bebidas</i>

A new price fixing decision adopted by the Belgian competition authority: resale price maintenance was assessed as a by object restriction in the <i>Le Creuset</i> case (Belgium)

Abstract The legal rules toward RPM in China are undergoing a major change. Reflecting the classical disputes over the issues in major competition jurisdictions, the change highlights the importance of an effect-based approach. We summarize how RPM had been regulated in China under the jurisdiction of Anti-Monopoly Law. We also discuss the potential switch to an “effect-based” approach and the likely reliance on economic analysis in the future, through a systematic study of all the 45 RPM cases in China between 2008 and 2022.

Resale Price Maintenance and Consumer Search

Poland ∙ Resale Price Maintenance after the CJEU’s Super Bock Judgment: The Polish Competition Authority’s Approach in Jura Poland

ABSTRACT This letter investigates the impact of the shift in antitrust treatment of Resale Price Maintenance (RPM) in the US beer industry, transitioning from a categorical illegality (per se illegal) to a case-by-case evaluation (rule of reason) post-Leegin. Our objective is to analyse the effects of this change on beer prices. We find a significant increase in beer prices in states permitting RPM after Leegin. Our findings contribute to the ongoing debate on RPM agreements by highlighting potential welfare implications associated with the shift in antitrust treatment.

The Court of Justice (ECJ) ruling in Super Bock is a significant development in EU competition law. The judgment marked the end of the Court’s sui generis approach to resale price maintenance. Whether or not this practice amounts to a restriction of competition by object is now evaluated in light of the same factors against which the legality of the rest of practices is assessed (namely the content of the agreement, its objective aims and the economic and legal context of which it is a part). Accordingly, it is conceivable that, at least in some scenarios, resale price maintenance does not have, as its object, the restriction of competition. It remains to be seen whether the potential for change will be reflected in subsequent developments.

This article analyses recent enforcement trends regarding vertical restraints within the EU and UK following the introduction of both the Vertical Block Exemption Regulation and the Vertical Agreements Block Exemption Order in 2022. In doing so, references are made to recent cases shaping the direction of the law in the area of vertical restraints, including the Super Bock and Valve Corporation cases. Trends are examined across key areas of enforcement, including (i) resale price maintenance, (ii) online sales and advertising restrictions, (iii) parity clauses, (iv) dual distribution and (v) territorial restrictions.

Resale Price Maintenance Practices as a Continuing Offence

Abstract This paper investigates the effects of Resale Price Maintenance (RPM) agreements in Europe by studying a legally permitted form of RPM in the book market. In particular, we study the effects of such agreements on prices and sales, finding that countries which have Fixed Book Prices policies witness higher book sales, relative to countries without such a policy, with no noticeable effect on the average price of books. We suggest that the mechanism for these findings is that FBP policies promote non-price competition and a diverse network of retailers, increasing quantity, whereas a change in bargaining power reduces double marginalisation, offsetting upward pricing pressure from RPM. While these results are limited to the book sector and are based on a limited number of countries changing policy, they nonetheless highlight that RPM agreements have the ability to confer positive competition effects and absolute prohibition of such agreements may not always be warranted.

We provide a novel theory of harm for resale price maintenance (RPM). In a model with two manufacturers and two retailers, we show that RPM facilitates manufacturer collusion when retailers have alternatives to selling a manufacturer's product. Because of the alternatives, manufacturers can only ensure that retailers sell their products by leaving sufficient retail margins. This restricts the wholesale price level even when the manufacturers collude. RPM allows colluding manufacturers to establish higher prices.

Resale price maintenance in EU competition law: understanding the significance of Super Bock

Resale price maintenance represents a special type of vertical restraint in a vertical agreement, in which an upstream undertaking defines, controls or restricts the price at which a downstream undertaking can resell its product. According to the Commission Regulation (EU) 2022/720 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to categories of vertical agreements and concerted practices the exemption shall not apply to vertical agreements which, directly or indirectly, in isolation or in combination with other factors under the control of the parties, have as their object the restriction of the buyer's ability to determine its sale price, without prejudice to the possibility of the supplier to impose a maximum sale price or recommend a sale price, provided that they do not amount to a fixed or minimum sale price as a result of pressure from, or incentives offered by, any of the parties. Minimum or fixed resale price maintenance represents a hardcore restriction and as such removes the benefit of the block exemption provided for in Art. 2 of the Regulation 2022/720. The paper deals with the legal regulation of restrictive vertical agreements in which a fixed or minimum resale price is determined in the competition law of the European Union, as well as the methods for such resale price maintenance. The problem will be considered through the analysis of relevant sources of law, practice of the European Commission and the Court of Justice of the European Union and doctrinal views.

On 29 June 2023, the Court of Justice of the European Union issued a preliminary judgment with respect to the status of resale price maintenance under EU competition law (Case C-211/22 Super Bock EU:C:2023:529). It clarified the notion of resale price maintenance and provided guidance as to the treatment of such conduct as a hardcore restriction and a potential by object restriction of competition under Article 101 TFEU. The purpose of this article is to assess how competition authorities and companies may use such recent case law to better understand resale price maintenance. We argue that, far from a per se infringement, the characterization of vertical price fixing as a restriction of competition ‘by object’ requires a detailed assessment of the context. In some cases (such as a risk of free riding, or protection of brand image), context may indeed cast doubt as to the alleged anticompetitive nature of such conduct.

Before the Amended Anti-Monopoly Law (“Amended AML”) was implemented in 2022, the divergence on resale price maintenance (“RPM”) between the AML public enforcement agencies and the courts had been noticeable and attracted heated debates. The AML administrative agencies responsible for public enforcement against RPM in China firmly adopt the principle of “prohibition + exemption” by imposing the burden of proof on the enterprises who are alleged to engage in RPM acts: enterprises have to apply for exemption once the agencies prove and prohibit the RPM acts. AML agencies do not need to prove the “restricting or excluding competition” effect under this approach. On the contrary, the courts had required the plaintiff in private enforcement cases to prove the “restricting or excluding competition” effects in addition to the RPM acts. In the Amended AML, such disagreement between public and private enforcement was formally addressed by explicitly adding the precondition of “restricting or excluding competition” and allocating such burden of proof to enterprises/defendants. Prior to the Amended AML, such a new trend was already seen in the landmark Supreme Court Yutai case, where the courts’ standards for determining the illegality of RPM started to move towards the approach of the AML public enforcement agencies. The new Supreme Court Judicial Interpretations on AML for comments issued in 2022 further confirmed the new trend and clarified that enterprises/ defendants shall prove that there is no “effect of excluding or restricting competition” in RPM cases. Nonetheless, how such a reformed RPM policy will be applied in practice remains blurred. The Old AML was applied in all the RPM cases after the Amended AML took effect. It is unclear how to apply the “exemption” rule and in particular “safe harbor” rule once an RPM act is identified and presumed to be anti-competitive. No case has ever touched such issues. EU’s overall RPM practice on RPM appears similar to China’s RPM policy with differences on safe harbor and exemption. It is useful to take reference to EU policy and practice along the reform road with China’s post-pandemic economy conditions taken into consideration. This paper first introduces the previous RPM policy and the new trend in China and then takes the reference to EU policies on RPM. This paper finally concludes that the elements of competitive effects, the new safe harbor rule, and the exemption rule should be further clarified in the coming implementation regulations and judicial interpretations to avoid antitrust law Type I errors, i.e., over-regulation.

Discussions around formalism have made a comeback in the competition law community. This paper seeks to clarify, first, what term means – and does not mean. It is, in essence, an approach to the identification and the evaluation of the lawfulness of practices that relies on their formal features – and their formal features alone. Formalism should not be conflated with, inter alia, the ‘by object’ treatment of conduct and with the use of legal categories (which are a necessity). Second, the paper shows that the Court has consistently placed substance above form in its case law – as cases like Super Bock and Slovak Telekom show. On the other hand, competition authorities appear to favour formalism. The tension between the Court’s and authorities’ favoured approaches might be a source of legal uncertainty and might result in the fragmentation of the legal system along several dimensions. Formalism, effects-based approach, restrictions by object, legal categories, resale price maintenance, refusal to deal

We explain why a manufacturer may impose a minimum resale price in a successive monopoly setting. Our argument relies on the retailer having noncontractible choice variables such as the price of a substitute good and/or the retailer's service effort. Our explanation for minimum resale prices is empirically distinguishable from alternative justifications that rely, for instance, on retailer competition and service free riding among retailers. Whether a min RPM benefits or harms consumers depends on its effects: if it softens competition with the substitute product, it tends to harm consumers, and if it secures service provision, it tends to benefit consumers.