Sunday, September 9, 2007
Commercial Agency Agreements, Vertical Restraints and the Limits of Article 81(1) EC: Between Hierarchies and Networks
Posted by D. Daniel Sokol
Ioannis Lianos of University College London has an excellent article in the newest issue of the Journal of Competition Law and Economics on Commercial Agency Agreements, Vertical Restraints and the Limits of Article 81(1) EC: Between Hierarchies and Networks.
ABSTRACT: Commercial agency agreements benefit from a specific competition law regime with regards to the application of Article 81 of the Treaty of the European Communities (hereinafter Article 81). Although they may contain clauses that can produce anticompetitive effects, such as minimum price fixing, these are generally found outside the scope of Article 81 paragraph 1 [hereinafter Article 81(1)]. In comparison, if a franchise or selective distribution agreement contains resale price maintenance clauses, Article 81(1) may apply. The existence of a distinct competition law regime for commercial agency agreements constitutes a paradox, as from an allocative efficiency perspective it makes no sense to distinguish between the two situations. By adopting a new-institutional economics perspective, this study will provide a justification for this specific competition law regime. The agency agreements exception will be considered as a specific form of the single entity defense that operates in situations of hierarchy. Other vertical restraints are mainly organizational mechanisms used in situations of network forms of organization. The distinction established between these agreements could thus be theoretically defended. More generally, the comparative institutional analysis of vertical restraints will provide a useful insight to delimit the boundaries of Article 81(1).