RPM in the European Union: Any Developments Since Leegin?

CFilippo Amato, Nov 14, 2013

Suspicions regarding the use of resale price maintenance in vertical agreements, i.e., agreements between a supplier and its distributors, have long existed in competition law. The European Commission defines RPM as “agreements or concerted practices having as their direct or indirect object the establishment of a fixed or minimum resale price or a fixed or minimum price level to be observed by the buyer.”

Until 2007, antitrust enforcers and scholars on both sides of the Atlantic appeared to share a broad consensus that RPM in vertical agreements constituted a serious restriction of competition that could never be justified. Indeed, one of the U.S. Supreme Court’s earliest decisions in the area of antitrust law, Dr. Miles, ruled that RPM was a per se violation of Section 1 of the Sherman Act. Similarly, the European Court of Justice and the Commission considered for decades that RPM constituted a restriction of competition “by object,” i.e., a serious restriction of competition that would invariably infringe Article 101(1) of the Treaty on the Functioning of the European Union -the EU competition law provision corresponding to Section 1 of the Sherman Act. Thus, RPM was, in principle, not subject to any justification.

This scenario changed in 2007 when the U.S. Supreme Court overruled Dr. Miles, holding in Leegin that RPM should no longer be considered a per se violation of antitrust law, but should be subject to a “rule of reason” approach. Leegin triggered a heated debate on both sides of the Atlantic with respect to the treatment of RPM in vertical agreements.

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