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The Supreme Court's Leegin decision has now brought the rule of reason to all purely vertical intrabrand distribution restraints. But the rule of reason does not mean per se legality and occasions for anticompetitive vertically imposed restraints may still arise. Of all those that have been suggested the most plausible are vertical restraints imposed at the behest of a powerful dealer or group (cartel) of dealers. Although a vertical distribution restraint resembles a dealer cartel in that both limit intraband competition, a manufacturer restraining the distribution of its product shuns the excess dealer profits a dealer cartel would seek. Accordingly, a knowledgeable and un-coerced manufacturer who restricts rivalry among dealers must do so for some other reason, such as to facilitate dealer services. In fact, however, manufacturers have been known to restrain intrabrand competition - especially through resale price maintenance - not to achieve more effective distribution but rather to appease dealer interests in excess profits. Whatever the social benefits of a distribution restraint that serves a manufacturer's self-interest, a competition-limiting restraint extracted by dealer power can be harmful. Vertical restraints reflecting dealer power could well be ignored by antitrust law if they were rare, insignificant in magnitude, or readily detected and remedied under other branches of antitrust law. But we doubt that dealer power is that rare and are troubled by an apparent history of price-enhancing resale price maintenance for the benefit of dealers. At least some of the claimed justifications for it actually reflect dealer power, and antitrust rules controlling horizontal combinations cannot themselves prevent those distribution restraints that result from the power of a single dealer. Requiring the plaintiff to prove that the challenged restraint is explained solely and exclusively on cartel, dealer power, or other non-efficiency grounds would be an attractive policy option for those who think such instances are rare. This option allows prompt validation of many such restraints. On the other hand, requiring the defenders to offer a plausible and legitimate business reason for every restraint would allow the antitrust tribunal easily to condemn those restraints obviously lacking justification but would complicate many cases in which dealer power is unlikely. Depending on the restraint, challengers might be required to prove specified indicia of dealer power, or, for legally less favored restraints, such power might be presumed subject to rebuttal by disproof of the same specified indicia. In sum, presumptions must be developed that will both clarify and simplify the fact finding process.
Vertical agreements between undertakings at the various levels of a supply chain have long been seen as a fundamental focus for antitrust legislation, such as the European Union’s Vertical Block Exemption Regulation (VBER). It goes without saying that such issues are particularly prevalent in digital markets. This authoritative commentary analyses the main restrictions in vertical agreements, emphasising the numerous new and contentious issues arising in the context of Internet distribution. It offers both legal and economic perspectives, as well as examines enforcement and possible changes to the legislation. The contributors – leading competition authority officials, lawyers, economists, and academics – provide in-depth discussions of topics that have emerged as areas for conscious policy choices, including the following: restrictions of online sales; price parity obligations; resale price maintenance; the duration of non-compete obligations; sustainability agreements; geo-blocking practices; and restraint of trade in pharmaceuticals. The contributions have emerged from the 2020 conference of the Global Competition Law Centre at the College of Europe in the context of the currently ongoing review of the VBER and vertical guidelines. With its multidisciplinary approach highlighting the efficiencies and harms caused by the restrictions at stake, this important book clearly shows how law and practice apply to specific issues relating to digital markets and how the law is likely to change in the near future. It will be of immeasurable value to lawyers and officials concerned with European competition law and academics in the field.
Theoretical discussions among competition lawyers and economists on the approach to Resale resale Price price Maintenance maintenance (RPM) and Vertical vertical Territorial territorial Restrictions restrictions (VTR) have often caused controversy. However, commentators agree that there is a lack of comprehensive study surrounding the topic. This book explores these two forms of anticompetitive conduct from legal, historical, economical, and theoretical points of view, focusing on the EU and US experiences. The author expertly goes beyond the current legal practice to explain, among other things, what approach should apply to RPM and VTR, and why RPM and VTR are introduced in situations where procompetitive theories would not make economic sense, or do not apply in practice. The book takes account of economic values, such as efficiency and welfare, as well as other values, such as freedom, fairness and free competition. Scholars and students of law will find the book’s depth of legal, economic and historical analysis to be a rich contribution to the scholarship. This book will also be of use to EU and US practitioners, and enforcers dealing with RPM and VTR cases.
This work focuses on the various types of vertical restraints by which a seller limits a purchaser's freedom to choose. Topics include tying arrangements, exclusive dealing and requirements contracts, and full-line forcing.
Antitrust Law and Economics of Product Distribution explores the economics of product distribution and examines whether the courts have formulated legal standards consistent with those economic principles - focusing on the sale of goods through dealers, distributors, and franchisees.
This treatise discusses the principal antitrust cases so readers can review precise holdings and fact summaries about each major case. It also includes black letter law and an analysis of current doctrine and trends in the law. Topics include the goals of antitrust law, the development of the Law of Contracts in restraint of trade, market structure and monopoly power, agreements among competitors, vertical restraints, price discrimination, mergers, and anticompetitive harm through governmental action.
The most important book on antitrust ever written. It shows how antitrust suits adversely affect the consumer by encouraging a costly form of protection for inefficient and uncompetitive small businesses.
Law and Economics of Vertical Integration and Control focuses on the processes, methodologies, and approaches involved in the law and economics of vertical integration and control. The publication first elaborates on transaction costs, fixed proportions and contractual alternatives, and variable proportions and contractual alternatives. Discussions focus on sales revenue royalties, ownership integration, output royalties, important product-specific services, successive monopoly, advantages and limitations of internal transfers, and transaction cost determinants. The text then examines vertical integration under uncertainty and vertical integration without contractual alternatives. The book ponders on legal treatment of ownership integration and per se illegal contractual controls. Topics include tying arrangements, public policy assessment, resale price maintenance, vertical integration and the Sherman Act, market foreclosure doctrine, and the 1982 Merger Guidelines. The text also takes a look at contractual controls that are not illegal per se, alternative legal rules, and antitrust policy. The publication is a dependable reference for researchers interested in the law and economics of vertical integration and control.
This book focuses on the current legal framework for vertical agreements in the EU and the US. Over the last ten years, antitrust rules governing these agreements have undergone thorough reform. In the EU, the old sector-specific block exemptions were replaced by Regulation 2790/99, applicable to all sectors of the economy. In addition, changes introduced to the procedural rules have led to the decentralisation of Article 81(3) and the removal of the notification requirement. In like manner, in the US the Supreme Court has gradually taken vertical restraints out of the per se illegality rule. What Sylvania achieved in placing non-price vertical restraints under the rule of reason in the late 1970s, the Khan judgment did for maximum resale price maintenance in 1997, whilst most recently and most significantly in 2007 the Leegin case followed suit for minimum resale price maintenance. The book is divided into four chapters. The first chapter considers the 'double nature' of vertical agreements and the regulatory dilemma. The second chapter explores the most influential economic theories underpinning current regulatory frameworks, and how these theories shape antitrust policy. The third chapter questions the adequacy of the current economic analysis in recent EU and US legislation and court decisions. The fourth chapter analyses how this maturing economic analysis can be reconciled with what commentators and regulators have identified as a key role for competition policy, redressing assumed imbalances between dealers and manufacturers. The author concludes by querying the prevailing logic of protecting sectoral interests above the competitive process.