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4th Competition Day 2010 Beograd, April 12, 2010 Resale Price Maintenance ( RPM )

B UNDES W ETTBEWERBS B EHÖRDE. 4th Competition Day 2010 Beograd, April 12, 2010 Resale Price Maintenance ( RPM ) Theodor Thanner, Director General Austrian Federal Competition Authority. Outline of the presentation. B UNDES W ETTBEWERBS B EHÖRDE.

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4th Competition Day 2010 Beograd, April 12, 2010 Resale Price Maintenance ( RPM )

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  1. BUNDESWETTBEWERBSBEHÖRDE 4th Competition Day 2010 Beograd, April 12, 2010 Resale Price Maintenance (RPM) Theodor Thanner, Director General Austrian Federal Competition Authority

  2. Outline of the presentation BUNDESWETTBEWERBSBEHÖRDE • The starting points of the discussion • The pros of RPM • The cons of RPM • How to deal with it? • The approach taken by the new BER • Some issues for discussion

  3. The starting points of the discussion BUNDESWETTBEWERBSBEHÖRDE • In 1911 the US Supreme Court in „Dr Miles“ decided on the per se-illegality of RPM. • From the 70s on this decision got more and more questioned (background: evolution of an effects-based approach in competition policy) • Courts tried to „circumvent“ the severity of this judgement („Colgate“ case …) • Finally on June 28, 2007 the Supr. Court made the rule of reason applicable („Leegin case“)

  4. The pros of RPM BUNDESWETTBEWERBSBEHÖRDE • The core reasoning: RPM avoids double marginalisation (= both vertical contractors demand (monopoly) profits) • RPM prevents free-riding (on quality, service etc. efforts) • RPM as an incentive for market entry • RPM enhances stock-keeping •  Inter-brand competition is essential

  5. The cons of RPM BUNDESWETTBEWERBSBEHÖRDE • The core reasoning: RPM is always about raising prices (minimum price fixing!), but competition aims at lowering prices (??). • RPM strengthens up-stream market power • RPM facilitates collusion (facilitates the monitoring of prices of competitors) •  How important is intra-brand competition?

  6. How to deal with it? BUNDESWETTBEWERBSBEHÖRDE • In 2007 the 1st Vienna Competition Confe-rence discussed several approaches, how to balance the pros and cons of RPM: • Leave it with (almost a) per se prohibition • Institute a safe harbour (market share threshold? enterprise size?) • On a case by case basis • Applying a rebuttable presumption

  7. The approach taken by the new BER BUNDESWETTBEWERBSBEHÖRDE • The Commission as well as the majority of member states (we too) opted for a flexible and cautious approach in the new Block Exemption Regulation (BER): • RPM is still dealt with as a hard core restriction in the regulation as such • But in the (accompaning) guidelines also the possible benefits of RPM are taken into account

  8. Some issues for discussion BUNDESWETTBEWERBSBEHÖRDE • What does case experience tell us? • Which analytical methods should we apply in balancing the pros and cons? • Are presumptions an appropriate tool for making enforcement more efficient? • What could be the likely issues against the background of the structural features of the Serbian economy?

  9. BUNDESWETTBEWERBSBEHÖRDE Thank you for your attention !

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