RPM Under EU Competition Law: Some Considerations From a Business and Economic Perspective

01 November 2013
By Prof. Dr. Frank P. Maier-Rigaud with Andrés Font-Galarza and Pablo Figueroa of Gibson Dunn

This article was selected by the 2014 Antitrust Writing Awards Board as the winner of the 2014 Best Business Economics Article.

In this article from Competition Policy International's Antitrust Chronicle, NERA Director Prof. Dr. Frank P. Maier-Rigaud and Andrés Font-Galarza and Pablo Figueroa of Gibson Dunn examine the current EU legal debate on how to characterize resale or retail price maintenance (RPM) from a competition point of view. RPM refers to an agreement between an upstream and a downstream firm in a vertical value chain concerning the retail level price. The authors begin by describing the evolution of EU policy in characterizing RPM, which has usually been treated under EU law as a hardcore restriction on competition. They then provide an overview of the main efficiency justifications advanced in the economic literature, focusing on horizontal and vertical externalities but also on the particularities of the so-called Veblen goods. The authors conclude that, based on nuances identified in the EU Commission's most recent guidelines regarding RPM, as well as a host of promising new empirical economic research, an argument can be made that a one-size-fits-all approach to RPM is not sustainable and may entail inefficiencies and negative welfare effects.