Abstract
Resale price maintenance could be both beneficial and harmful to competition in various circumstances. It would only constitute a vertical monopolistic agreement where the anti-competitive effect cannot be addressed or offset by the pro-competitive effect. RPM has been scrutinised in private litigation in the U.S., the EU and China regarding whether it is per se illegal or subject to the rule of reason. The Shanghai Court and the National Development and Reform Commission (NDRC) may find it challenging to determine whether RPM can substantially increase the efficiency of a distribution chain or restrict competition.
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Notes
The Economics of Resale Price Maintenance and Implications for Competition Law and Policy – Remarks of Wright (2014).
Smith (2008).
Leegin Creative Leather Products, Inc. v. PSKS, Inc., 551 U.S. 877 (2007).
Stallibrass and Wang (2013).
Dr. Miles Medical Co. v. John D. Park and Sons Co., 220 U.S. 373 (1911).
Leegin Creative Leather Products, Inc. v. PSKS, Inc., 551 U.S. 877 (2007).
Easterbrook (1984a).
Wright and Ginsburg (2012) at 2418.
Tirole (1990).
Leegin Creative Leather Products, Inc. v. PSKS, Inc., 551 U.S. 889–94 (2007); Posner (1977).
Elzinga (1977).
Leegin Creative Leather Prods., Inc. v. PSKS, Inc., 551 U.S. 877, 892–94 (2007): “retailer cartels, manufacturer cartels, foreclosure of rivals by a powerful manufacturer, and foreclosure of rivals by a dominant retailer”.
Pitofsky (1983).
Cooper et al. (2005).
Marvel and McCafferty (1985).
Elzinga and Mills (2010) at 372.
Leegin Creative Leather Products, Inc. v. PSKS, Inc., 551 U.S. 898–99 (2007).
Grimes (2008).
EC Guidelines on Vertical Restraints, (19 May 2010) O.J. C 130, §§ 48, 223.
Commission Regulation on the Application of Article 81(3) of the Treaty on the Functioning of the European Union to categories of vertical agreements and concerted practices, No. 330/2010, (2010) O.J. L 102/1; Giovannetti and Stallibras (2011).
Schmidt (2013) at 277.
Peeperkorn (2008a).
TFEU Art. 101(3), i.e. if such restriction: (i) produces efficiencies, (ii) the efficiencies are passed on to consumers, (iii) is proportionate to achieve the efficiencies, and (iv) does not completely eliminate competition.
Article 4 of Commission Regulation (EU) No. 330/2010 of 20 April 2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union (TFEU) to categories of vertical agreements and concerted practices, (2010) O.J. L 102/1; Verras (2009).
Case C-279/06 CEPSA Estaciones de Servicio SA, [2008] ECR I-6681, para. 72.
Case C-243/83 Binon, [1985] ECR 201.
Case C-260/07 Pedro IV Servicios, [2009] ECR 2437, para. 82.
EC Guidelines on Vertical Restraints 2010, § 47, (2010) OJ C 130/1.
EC Guidelines on Vertical Restraints 2010, § 48.
Commission Regulation 330/2010, (2010) O.J. L 102/1.
Ewald (2012).
Article 4 of Commission Regulation (EU) No. 330/2010 of 20 April 2010 on the application of Article 101(3) of the TFEU to categories of vertical agreements and concerted practices, (2010) OJ L 102/1.
European Commission, DG Competition, Guidelines on Vertical Restraints 2010, (19 May 2010) OJ C 130/1; Peeperkorn (2008b).
Easterbrook (1984b).
Jones (2008).
EU Parliament – Committee on the Internal Market and Consumer Protection, Proposal for a Directive 2013/0185(COD) (16 December 2013), Art. 16, http://www.europarl.europa.eu/meetdocs/2009_2014/documents/imco/dv/ca_schmidt_/ca_schmidt_en.pdf.
AML 2008, Art. 14 expressly prohibits price-fixing and restricting the minimum resale price. It also prohibits other vertical agreements deemed unlawful by China’s competition authorities.
AML 2008, Art. 15.
Qi (2014).
Deng and Dai (2014).
AML 2008, Art. 46 enables the NDRC to impose fines of between 1 and 10 % of an entity’s annual turnover in the year preceding the infringement.
Dodoo (2013a).
The NDRC issued Provisions on the Administrative Procedures for Law Enforcement against Price-Fixing on 29 December 2010, which became effective on 1 February 2011.
NDRC Provisions 2011, Art. 14.
NDRC, “Biostime and Other Milk Powder Manufacturers Company Were Fined RMB 668.73 Million for Their Anti-Competitive Behaviour Violating the AML”, http://www.sdpc.gov.cn/xwfb/t20130807_552991.htm.
“NDRC Explains Why Wyeth Received Immunity Because It Was the First One To Admit Guilt and To Lower Price”, 21st Century Economic Report (8 August 2013), http://finance.sina.com.cn/chanjing/gsnews/20130808/022816379184.shtml.
AML 2008, Art. 46(2).
China’s NPC approved a new national economic and social development strategy for the next five years (2011–2015) in March 2011; Stephen Roach, “China’s 12th Five-Year Plan: Strategy vs. Tactics” (6 April 2011): “Price stability is listed as number one – just ahead of efforts to stimulate consumer demand”.
Dodoo (2013b).
Commission Notice on Immunity from fines and reduction of fines in cartel cases, (8 December 2006) O.J. C 298; Commission Guidelines on the method of setting fines imposed pursuant to Article 23(2)(a) of Regulation (EC) No. 1/2003, (1 September 2006) O.J. C 210; U.S. Department of Justice, Corporate Leniency Policy (10 August 1993), http://www.justice.gov/atr/public/guidelines/0091.htm; U.S. Department of Justice, Leniency Policy for Individuals (10 August 1994), http://www.justice.gov/atr/public/guidelines/0092.htm.
NDRC Provisions 2011, Art. 14(3).
On 7 August 2013, the NDRC fined six infant-formula manufacturers for imposing RPM in connection with distribution agreements.
The AML prohibits suppliers from fixing the resale price or restricting the minimum resale price.
Stallibrass and Wang (2013).
Jones (2009).
Bush (2009).
Accardo (2012).
SPC Provisions 2012, Art. 3: In competition litigation, an Intermediate People’s Court generally serves as the court of first instance; with the SPC’s approval, Primary People’s Courts may also have jurisdiction as the court of first instance.
AML 2008, Art. 14(2).
Civil Procedure Law, Art. 147: litigants have the right to appeal to the People’s Court directly above the court of first instance; Civil Procedure Law, Art. 158: the court of second instance then renders a final judgment.
AML 2008, Art. 13.
Blair et al. (2005).
AML 2008, Ch. II; AML 2008, Art. 15.
Civil Procedure Law, Art. 20: High People’s Courts should exercise jurisdiction in cases with substantial influence on their respective jurisdictional regions; Civil Procedure Law, Art. 21: In cases with substantial national influence, the Supreme People’s Court may serve as the court of first instance.
AML 2008, Art. 1: “… to prevent and restrain monopolistic practice, safeguard the fair market competition, and to protect the benefits of consumers and the common interests of society”.
Ruibang v. J&J (Shanghai High Court, No. 63, 1 August 2013).
AML 2008, Art. 18(v).
AML 2008, Art. 19; Howell et al. (2009).
AML 2008, Art. 17.
AML 2008, Art. 6; notably, Art. 17(6) AML 2008 prohibits abuse of dominance through price discrimination without legitimate reasons.
It is considerably lower than the 50 % threshold where single-firm dominance is presumed under Art. 19 of the AML 2008.
AML 2008, Art. 19.
Ruibang v. J&J (Shanghai High Court, No. 63, 1 August 2013).
Kaplow (2011).
Buttigieg (2010).
OECD, Competition Committee, Roundtable on Resale Price Maintenance, 10 September 2009, DAF/COMP (2008) 36–57.
AML 2008, Art. 15.
Klein and Murphy (1988).
Ruibang v. J&J (Shanghai High Court, No. 63, 1 August 2013).
Lao (2008).
Korenblit (2012).
SPC Provision 2012, Art. 4.
Emch and Wang (2013).
Alexander Kaufman, “Johnson & Johnson (JNJ) Loses Anti-Monopoly Case in China, Ordered To Pay $85,800 to Local Dealer”, International Business Times (1 August 2013).
Ruibang v. J&J (Shanghai High Court, No. 63, 1 August 2013).
PRC Civil Procedure Law (CPL 2013), Art. 64.
The SPC Provisions 2012 will be detailed in Part 4.
CPL 2013, Art. 64; Provisions of the Supreme People’s Court on Evidence in Civil Procedures (Evidence Provisions 2011), Arts. 4–7.
SPC Provisions 2012, Art. 7.
Zhang (2011).
Bu (2013).
AML 2008, Art. 13.
AML 2008, Art. 13(1); SPC Provisions 2012, Art. 8.
Cohen et al. (2011).
SPC, Evidence Provisions 2011.
SPC, Evidence Provisions 2011, Art. 73; Gu (2013).
Zamir and Ritov (2012).
SPC Provisions 2012, Art. 13.
CPR 35: Experts and Assessors, http://www.justice.gov.uk/courts/procedure-rules/civil/rules/part35; CPR – Court Guides, Chancery and Commercial Court Guides.
CPR 35.3: the expert is subject to an express duty to help the court on the matters within his or her expertise, and this duty overrides any obligation to the party from whom he has received instructions; CPR 35.7: the court can also order that expert evidence be provided by a single expert appointed jointly.
Wood (2012) at 404.
The NDRC promulgated the Anti-Pricing Monopoly Regulations (NDRC Regulation 2011) on 4 January 2011, which took effect on 1 February 2011.
NDRC Regulation 2011, Art. 5.
NDRC Regulation 2011, Art. 8(i), (ii); PRC Price Law, Art. 14(1): “undertakings must not work collaboratively to control market prices to the great detriment of the lawful rights and interests of other undertakings or consumers”.
Art. 101(1) TFEU; Goyder (2011).
Telser (1960).
Overvest (2012).
Comanor (1985).
Ning et al. (2013).
Davis (2010).
Huang (2013).
SPC Provisions 2012, Art. 2.
Wang and Hughes (2012).
Heger and Han (2013).
Cohen et al. (2011).
Blair and Kaserman (2009).
Dodoo (2013c).
Ning et al. (2013).
The Economics of Resale Price Maintenance and Implications for Competition Law and Policy – Remarks of Wright (2014).
Posner (1981).
SPC Evidence Provisions 2011, Art. 77: the documents formulated by state organs or social bodies according to their respective functions are, as a general rule, more forceful than other written evidence.
Wang (2013).
PRC Civil Procedure Law (CPL 2013), Arts. 54, 55.
Han and Li (2013).
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Bu, Q. Resale Price Maintenance (RPM) Agreements Under AML 2008 – Per Se Illegal Treatment vis-à-vis the Rule-of-Reason Approach. IIC 46, 565–587 (2015). https://doi.org/10.1007/s40319-015-0355-7
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DOI: https://doi.org/10.1007/s40319-015-0355-7