Monday, October 24, 2016

Vertical Restraints, the Sylvania Case, and China's Antitrust Enforcement

Zhiyong Liu, Indiana State University - Scott College of Business and Yue Qiao, Shandong University explore Vertical Restraints, the Sylvania Case, and China's Antitrust Enforcement.

ABSTRACT: In this article we offer an overview of the relevant economic theories of vertical restraints and the legal treatment toward them, and especially focus on the 1977 landmark case of Sylvania and its influence on China’s antitrust enforcement on vertical restraints. China’s competition policies, and particularly its antimonopoly law, do not instruct explicitly on the enforcement approach (per se versus rule of reason) toward vertical restraints. But from the review of China’s recent antitrust cases, we find that there is a division in the approaches taken by public versus private enforcement --- even though administrative enforcement is more inclined to applying per se prohibitions (or in some cases applying the EU-style prohibition-plus-exemption approach), it is apparent that rule of reason is the (increasingly) prevailing approach taken by the courts.

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