Friday, October 11, 2024

Assessing the Antitrust Liability of Vertical Restraints

Assessing the Antitrust Liability of Vertical Restraints

Anthony J. Dukes

University of Southern California - Marshall School of Business

Aishwarya Joshi

University of Michigan

D. Daniel Sokol

USC Gould School of Law; USC Marshall School of Business

Date Written: September 07, 2024

Abstract

This research examines trends in the antitrust liability for managers employing vertical restraints in marketing channels of distribution. We consider five vertical restraints: Minimum RPM, Maximum RPM, Primary-Line and Secondary-Line forms of Price Discrimination (Robinson-Patman), as well as Non-Price (Territorial) Restraints. Compiling data from all cases decided in U.S. federal courts since 1980, we empirically demonstrate that over time, Max RPM and Primary-Line are subject to significantly less litigation. For disputes involving the other three restraints, our analysis indicates a more judicious interpretation by courts. Using the theory of case selection, we posit that five landmark rulings over the past 40 years have established a legal regime that gives marketers flexibility in implementing efficient, pro-consumer practices yet still protects the market against anticompetitive conduct. Importantly, case outcomes do not suggest a laissez faire approach to vertical restraints. Rather, the current judicial climate balances anti-competitive effects against non-price customer benefits. Through a detailed analysis of individual cases, we draw lessons for marketers who operate in marketing channels and conclude that they be guided by the principle of customer value creation.

https://lawprofessors.typepad.com/antitrustprof_blog/2024/10/assessing-the-antitrust-liability-of-vertical-restraints.html

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