1st Edition

Resale Price Maintenance and the Law The Future of Vertical Restraints

By Christy Kollmar Copyright 2023

    The question of how to properly enforce against RPM has been a contentious debate for decades on both sides of the Atlantic. The catalyst is the acceptance that RPM can generate both anti-competitive effects and pro-competitive efficiencies that need to be properly balanced to ensure against Type I/Type II errors and to create viable legislation. Part I focuses on 100 years of US origins and the current legal approach to VR enforcement, which reveals the precedent responsible for the transition between per se illegality and the rule of reason thresholds at the federal level. Nine anti-competitive and 19 pro-competitive theoretical models are also introduced to clearly demonstrate the true nonconsensus existent between economists as to whether RPM is deleterious enough to justify a stringent approach to RPM regulation. Part II closely examines the EU origins and current legal structure, where RPM has maintained its hardcore by-object designation pursuant to Art. 101(1) TFEU with the consequence of having no safe harbours, no applicability of the De Minimus Doctrine, an onerous negative rebuttable presumption, non-severability of the agreement and almost no chance of obtaining an exemption under Art. 101(3). This is exacerbated by the EC’s lack of guidance on how to prove all conditions necessary for an Art. 101(3) exemption and when a vertical arrangement actually escapes Art. 101(1) applicability. The aim of this book is to examine the economic models, historical origins and legal structures of the US/EU regimes to develop proposals on how to modify the EU’s current legal structure to ensure proper enforcement of RPM behaviour that actually enhances legal certainty through a more aligned approach at the national level. Part III proposes five solutions which scrutinise the concepts of appreciability, hardcore and by-object restraints, to implement modifications to EU’s current legal framework to ensure RPM receives reasonable and equitable treatment in line with economic theory.




    List of Abbreviations

    List of Annexes and Tables

    Chapter 1 Introduction


      1. Topic Introduction
        1. Background on Assessment and Application: Legal Issues and Development
        2. Background on Enforcement Best Practices: Investigative Techniques and Enforcement Protocol

      2. Research Objectives and Main Research Questions
      3. Structure and Scope of Book
      4. Conclusory Remarks




    Chapter 2 The Legal and Political Origins of RPM – United States


      1. United States: Historical Origins & Legal Structure of RPM
        1. The Introduction of the Sherman Act and its Common Law Roots: 1889-1910
        2. Dr. Miles Era- the Right of Alienation and its Per Se Impact: 1911-1930
        3. Fair Trade Era- Carving out Exceptions to the Sherman Act: 1930-1975
        4. Post Fair Trade Era- Non-Price vs. Price Transition Towards Rule of Reason: 1975 – 2007
        5. Leegin Era- Maximum vs. Minimum RPM Transition Towards Rule of Reason: 2007 – Present

      2. Chapter Conclusion: US Historical Origins and Legal Structure


    Chapter 3 The Economics of Vertical Agreements – Background


      1. Chapter Introduction
        1. General Economic Background of Vertical Restraints
        2. General Economic Background of RPM

      2. Background on Economic Theories of RPM
        1. Link Between Schools of Thought and Economic Models
        2. General Structure of Models: Vertical and Horizontal Elements of RPM
        3. Digital Single Market, the E-Commerce Sector Inquiry and the Internet
          1. Goals of the EC: Digital Single Market and E-Commerce Sector Inquiry
          2. Models of Change: How the Internet Changed Market Dynamics

      3. Conclusion: RPM Economic Background and E- Commerce

    Chapter 4 The Economics of Vertical Agreements – Models


      1. Anti-Competitive vs. Pro-competitive Economic Models of RPM
        1. Anti-Competitive RPM Theories
          1. Facilitating Collusion Upstream or Downstream
          2. Increase in Prices, Lifecycles and Product Favouritism
          3. Foreclosure and Restriction of Entry Both Upstream and Downstream
          4. Foreclosure as a Commitment Device in Protection of Monopoly Rents
          5. Dampen or Soften Competition Both Upstream and Downstream

        2. Pro-Competitive RPM Theories
          1. Special Services and Free-riding
          2. Quality Certification and Signalling
          3. Image Theory: The Allure of Paying More
          4. Demand Uncertainty and Inventories
          5. Outlets and Distribution Density
          6. Moral Hazard and Double Moral Hazard
          7. Production of a Good when Manufacturers’ Risks are Low
          8. Contract Enforcement Mechanism and Quality Control
          9. Loss Leader Selling
          10. Less Efficient Dealer and/or Distributional Efficiency
          11. Price Discrimination
          12. Spatial Price Discrimination
          13. Where imposing an RPM floor leads to a decrease in collusive behaviour
          14. RPM with Optimal Delegation
          15. New Market Entry or Product Launch
          16. Pro-competitive models which rely on the purely vertical aspect of RPM

      2. Conclusion: No Consensus among Economists on Impact of RPM




    Chapter 5 The Legal and Political Origins of RPM – European Union


      1. European Union: Historical Origins & Legal Structure of RPM
        1. Historical Background of EU Vertical Enforcement
        2. Current Legal Structure of EU Vertical Enforcement
          1. Block Exemptions and their role in vertical restraint enforcement
          2. Article 101(3): a closer examination of the individual assessment and its role in vertical restraint enforcement

      2. Chapter Conclusion: EU Historical Origins and Legal Structure


    Chapter 6 The Legal Concepts of By-Object, By-Effect and Appreciability


      1. Introduction to the Distinction between By-Object and By-Effect
        1. A Background on By-Object Restrictions: The Finer Details
        2. Categorisation and Analysis of By-Object Restrictions: A Deeper Dive
          1. By-Object Categorisation: Overview of Differences between the EC and Case Law Approaches
          2. By-Object Categorisation: Approaches to Appreciability

      2. By-Effect Comparison: A Concise Overview of the Main Differences
      3. Return to the RPM Legal Structure in light of the By-Object/By-Effect Dichotomy: Overview of the Current Approach to RPM Enforcement
        1. Article 101(3): a closer examination of the individual assessment and its role in RPM enforcement

      4. Chapter Conclusion




    Chapter 7 Proposals and Solutions


      1. Chapter Introduction
      2. Time for a Change? Transatlantic Synchrony towards Revealing a Malfunctioning Regime
        1. RPM Legal Regime: Current Challenges undermining its Efficacy

      3. Horizontal Non-consensus: Should NCAs have their own agenda?
      4. A New Way Forward: Developing a More Viable Approach to RPM Enforcement
        1. Proposed RPM Solutions
          1. Solution 1: Escaping automatic Article 101(3) TFEU applicability: developing a mechanism where RPM can be found inappreciable, and therefore, not in violation of Article 101(1) TFEU
          2. Solution 2: Eliminate RPM’s hardcore designation by shifting its inclusion in the VBER from Article 4 to Article 5
          3. Solution 3: Elimination of RPM’s hardcore designation through its application to Article 2 of the VBER (original and modified case scenarios)
          4. Solution 4: Application of the De Minimus Doctrine to RPM
          5. Solution 5: Recommendations for Improvement of Status Quo

      5. Chapter Conclusion


    Chapter 8 Conclusion


      1. Conclusion: Most Serious Considerations to Enhance the Efficacy of the Current RPM Regime
        1. Overview of Solutions: The Best Way Forward

      2. Final Remarks

    Annex 1 RPM US Origins

    Annex 2. RPM Economic Models

    Annex 3. RPM Model Timeline



    Dr. Christy L. Kollmar, Esq. has been a licensed practicing attorney in the United States since 2007 and is a member of the District of Columbia, Wyoming, Montana and Washington bars, including five federal court jurisdictions. After obtaining her Baccalaureate of Arts (BA) from University of Montana, a Juris Doctorate (JD) from Nova Southeastern University, a Master of Business Administration (MBA) from College of William & Mary, and a Master of Global Management (MGM) from Thunderbird School of Global Management, she relocated to Europe and attained a Master of Laws (LL.M.) from Riga Graduate School of Law and a Doctor of Philosophy in Law (Ph.D.) from University of Copenhagen.

    Prior to her continued legal education, she served as a prosecuting attorney focused on drug and familial abuse crimes, followed by managing her own US federal and state-level criminal defense practice (Kollmar Law Office, PLLC.) focused on felony criminal litigation. Alongside of maintaining her criminal practice, Dr. Kollmar currently serves as a postdoctoral researcher at University of Copenhagen, Centre for Advanced Studies in Biomedical Innovation Law with a particular focus on comparative antitrust law and economics, where her academic portfolio comprises diverse supervision and lecturing in EU Law, Comparative Contracts, EU Competition Law and Economics, and Legal Research Methods.