The public policy towards minimum resale price maintenance (‘RPM’), or vertical price fixing, namely the practice whereby a manufacturer stipulates a retail price floor below which its products are not to be resold, has traditionally been one of the most contentious antitrust issues on both sides of the Atlantic. Economic theory suggests that RPM is capable of producing ambivalent welfare consequences, thus obscuring the intellectual debate as to the optimal antitrust response to the practice. This normative uncertainty is best reflected in the divergent approach taken to RPM under the relevant laws of the United States and the European Union, arguably the world’s two most mature antitrust jurisdictions. In 2007, in its seminal Leegin judgment, the United States Supreme Court abolished the century-old per se ban on vertical price fixing. At the same time, under the European Commission’s recent Guidelines on Vertical Restraints price floors remain subject to a quasi-conclusive presumption of illegality. The purpose of this thesis is to examine whether a more consistent approach through the relaxation of the European Commission’s blanket prohibition on price floors would be feasible and, in effect, desirable. Based on insights from new institutional economics, it will be argued that RPM may on certain occasions be a substitute – however imperfect – for vertical integration, where a merger would be prohibitively costly for the parties, in which case the hierarchical form of organisation will have to be replaced by a hybrid governance structure. Under certain circumstances, a fixed retail profit margin may enhance the self-enforcing range of long-term partnerships governed by relational norms, as well as the manufacturer’s control over distribution by reducing substantially the transaction costs associated with monitoring dealer performance. At the same time, however, the analysis will take into account the various objections to the practice, most notably the horizontal collusion theory, in order to argue that the approach to RPM should in principle be cautious. The discussion will culminate in the proposal for a new, workable analytical framework for the substantive assessment of vertical price fixing under EU competition law, which will be based on a – genuinely – rebuttable presumption of anti-competitive object under Article 101(1) of the Treaty on the Functioning of the European Union
