RPM - Resale Policy Maintenance?

Abstract: This thesis is inspired by two thoroughly debated developments in the competition/antitrust law transatlantic arena and more specifically in the field of a price-related vertical restraint known as resale price maintenance (RPM). This restraint, loosely defined, encompasses the predetermination of minimum or fixed retail prices by a manufacturer in a vertical distribution agreement. The first development occurred in the United States in June of 2007, when the US Supreme Court in the Leegin judgment declared that RPM would no longer be dealt with under the per se rule and be perceived as restrictive of competition by very nature, but would instead be subject to a more lenient approach under the rule of reason. The second development is occurring in Europe as we speak and consists of the entry into force, in June of 2010, of the Commission´s newly adopted Verticals Regulation. Up to this date, RPM has virtually been untouched by the Commission´s more modernized, economic approach towards vertical restraints in general. This specific restraint has consistently been perceived as a high-risk practice and has thus been approached stringently under the relevant EU regime. The primary question triggered by these developments is why this decisive change in approach has occurred in the US. Also, has this change left or should it leave a transatlantic trace in the European RPM regime? Finally, where is Europe headed policy-wise on this topic post-Leegin and June 2010, and why? These issues have constituted the focal point of this thesis. In essence, the transformation on US level has substantially been influenced by developments in economic thinking addressing the competitive potential of RPM. Beyond this, the change in direction has firmly been based on factors particular to the US antitrust system. Although the new Verticals Regulation in Europe shows signs of a more progressive, nuanced approach towards this restraint, any future changes in this context will be subtle and cautious. There is still substantial economic and ultimately also legal uncertainty regarding the actual and overall impact of this restraint on competition. If overly drastic policy measures are taken towards a more lenient RPM approach, this element of uncertainty increases the risk of harm on competition and consumer welfare. At the same time, the acknowledgment that RPM does have pro-competitive potential in certain instances also increases the risk that the up-to-date stringent approach towards this restraint in Europe gradually become outdated and in need of reevaluation. So, what could constitute the European golden mean on this topic as of June 2010 and 10 years on?