Thin slice of the Cake.
What is RPM? + Distinction: Maximum
+Recommended VS Minimum and fixed RPM.
When did the issue become „hot‟ ?
Pros and Cons.
What is the current law is? Regulation 4 (a) of
Regulation (EU) No330/2010.
Diagram highlighting the incorrect
Manufacturer and retailer
Regarding price (limits)
Sold to final consumers.
Min + Fixed RPM = hardcore restrictions
Max + recommended= effect.
Paragraph 47 of Guildelines of Vertical Restraint.
Leegin Creative Leather Products, Inc v PSKS, Inc., 127 S. Ct. 2705
Why was it controversial?
Rule of Reason: USA vs. EU.
EU: more "economic approach” should a rule of reason apply ?
Article 101(3): Individual Exemptions, Vertical Exemption Regulations, Horizontal Exemption Regulations.
Ultimately the Commission decided in its new vertical block exemption against the abolition of the
presumption of illegality. Hence did not change the statu quo.
Regulation 4 (a) of Regulation (EU) No330/2010
“If you know the why for living you can endure almost anyhow.” Nicci
1)Protects retail margin and aligns incentives of suppliers and retailers.
2) Product “quality certification”.
3)Reduce free riding opportunities.
4) Encourage retailers to invest in newly launched products.
1) Supports collusion on the supplier/retailers level or at least to soften
completion among them.
2) Commitment Problem which can lead to monopoly earnings.
3) Dampens the system through networks of interlocking RPM arguments.
No particularly strong empirical evidence
Lafontaine and Slade 2008: Self imposed RPM have
Office of Fair Trading:
an overall positive impact while exogenously imposed RPM
have a negative one. But caution against drawing conclusion.
Empirical Evidence would be
intervened against RPM
various times…RPM‟s anticompetitive benefits did not
outweigh its efficiency benefits. However, “Net Book
Agreement” the OFT commissioned
impact of the removal of RPM in books.
Did the Commission lost an opportunity in 2009?
No, I believe for the time being the Commission
wisely retained RPM in the presumption of
illegality box- no solid empirical evidence to
prove whether the pros outweigh the cons.
Leegin: reminder pro-competitive effects
Thus next step for EU competition law should be
to construct empirical evidence and move
towards a gradual+ non radical change.
1) Widen the gap between „per se illegality‟
and „object‟ box so that it is crystal clear for
the parties that there is potential to rebut
„presumption of illegality‟ in the EU.
-more serious consideration should be paid
2) Accept a trial period. Since Comm has
already soften its approach towards RPM +
para. 19 of the Commission‟s draft Guidelines
about vertical restraints acknowledges the
positive effects that RPM can have –
Legal Uncertainty, Compexity, Increase Regulation
cost, financial crisis.
A) the Comm could use market share as a screen in
prioritizing the cases. By implication it would deal
with the cases that have a large market share and
have more likely anticompetitive effects.
B) Remove RPM from the hardcore restraints in the
De Minimus Notice, at least for a trial period.
If these steps work : act as the „base‟ for future.
If NOT, at least we can reassure our hesitations and
we put the debate to rest.
Thin slice of the cake
Scrutinized what RPM is + the difference between
max Vs min and fixed.
We have observed when did the issue became
“hot” after Leegin 2007.
Stated the Current Law in this area and
emphasized article 4 (a) of Regulation (EU) No
330/2010 : Fixing the retail price is strictly
Corrected the wrong perception and offered
some new recommendations.
Seen where the scale lean?
And “Unlocked the Lock”.
Thank you very much!!!
Best wishes for your Christmas
Comparison with Article 102.
Burden of Proof on the Commission?
George P. Kyprianides