The expression “resale price maintenance” (“RPM”) refers to
agreements between a seller and a buyer setting limits on the price at
which the buyer may resell the products purchased. Typically, the
agreement is between a manufacturer and retailers and concerns the price
at which these may sell to final consumers.
In antitrust law, the treatment of true maximum resale prices or mere
price “recommendations” is now relatively uncontroversial. Both in
Europe and in the United States, recommended resale price policies and
maximum RPM agreements face little or few obstacles under the relevant
rules of competition law addressing agreed restraints of competition
(Section 1 of the Sherman Act and Article 81 EC). In the United States, in
1997 the Supreme Court overturned in Khan the rule of per se illegality
against maximum RPM that it had previously embraced in Albrecht. The
European Court of Justice held in Pronuptia that recommended resale
prices do not in themselves infringe Article 81(1) unless there is collusion
on the actual application of these recommended prices. The European
Commission’s block exemption Regulation on Vertical Restraints and the
accompanying Guidelines expressly permit maximum resale prices.
Fixed or minimum RPM tell a different story. Under a minimum
RPM arrangement, the manufacturer sets, as an enforceable obligation, a
price floor below which dealers may not sell the product. In the United
States, minimum RPM was subject to a strict per se prohibition under the
1911 Supreme Court decision in Dr Miles, until the per se rule was
replaced in 2007 in Leegin by a “rule of reason” approach whose precise
implications have yet to be defined.
There is a widespread perception – ultimately incorrect – that
minimum RPM constitutes a per se offence in Europe under Article 81.
Consequently, the Leegin decision raised expectations that the approach to
RPM in the EU might be also modified on occasion of the ongoing review
of vertical restraints. Yet, the Commission’s proposed Regulation and
Guidelines, introduced for public comments on 28 July 2009, exhibit a
fundamental continuity with the texts currently in force. This continuity
was foreseeable with the proper understanding of the scope and nature of
the rule against RPM in Europe. While RPM is presumed illegal, any
alleged procompetitive benefits must be examined in individual cases.
Section II of this article briefly summarizes and criticises, in a nontechnical
manner, some of the favourable and unfavourable views on RPM
in the literature. Section III looks at the treatment of RPM under European
competition law, and more specifically under the Verticals BER.