A Study On The Legal Application Of Maintaining Resale Price

Resale price maintenance, which is a typical behavior of vertical restraint of competition, is the practice whereby a manufacturer and its distributors agree that the distributors will sell the manufacturer’s product at certain prices (resale price maintenance), at or above a price floor (minimum resale price maintenance) or at or below a price ceiling (maximum resale price maintenance). As regards the judgment of the legitimacy of resale price maintenance, traditional anti-monopoly law emphasizes that the resale price maintenance behavior contributes to the formation of vendors or manufacturers of Cartel, or may have a negative effect of being used as a market blocking means by dominant retailers, for which reasons, per se illegal rules had long been applied to such behavior. Rule of reason is a doctrine of determining the legitimacy of a behavior. Its establishment means the alleged anti-competitive behavior is not regarded per se illegal as a whole. When applying this rule, analysis is made to examine the reasonability of a behavior of an enterprise in combination of its working scenario, and determine the legitimacy of such behavior by looking at its effect on competition, general economy or public welfare. The United States Supreme Court decision of Leegin case as of 2007 abandoned per se illegal principle and apply the principle of reason, this change is not only one of the most important development of American antitrust law in recent decades, but also affected the legislation and judicature of other countries in the world. This development could be good lesson for Section 14,15 of China’s anti-monopoly law to learn.Resale price maintenance is becoming more and more popular in China’s contemporary economic life. In order to withhold negative effective of RPM, while ensure the livelihood of market, the significance of the research of a mechanism that suits our country becomes eminent. As a matter of fact, the ruling doctrine for RPM is not unified so far. The reasonability of RPM is a matter in dispute, which is due to the fact that RPM does not have an obvious anti-competitive effect as horizontal restraints, nor does it have a positive effect to competition as non-price vertical agreement. In U.S., E.U. and other developed countries, where the governing rule for RPM is well too simple, the legal policy for RMP would vary with economic environment. Therefore, the analysis of how to apply rule of reason on RPM is complicated. It is necessary to understand the exemption mechanism applying to RPM before we conduct reasonability analysis for RMP, in other words, for those practice that applies to exemption rules, such rule could be applied directly. As to those practice that the law does not have a directly applying rule, but its reasonableness is eminent, we could use economic analysis to examine the motivation of RPM, the structure of relevant market, the function of the product and its effect, so as to exempt those RPM that do not meet the condition of anti-competitive, and thereby narrow the scope of the cases that need in-depth analysis as well as simplify while increasing the certainty of rule of reason. The ultimate aim is to improve economic output.