INTERNATIONAL : USA - VERTICAL RESTRAINTS - ECONOMIC ANALYSIS - PROPERTY RIGHTS - RULE OF REASON

USA : The role of economic analysis in the assessment of vertical restraints

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Vertical restraints commonly serve as devices to establish property rights to customers generated by costly promotional efforts. In some cases, rights to customers brought to dealers by a supplier are protected by exclusive dealing. In others, dealer efforts generate the customers, and those customers are protected by customer restraints, territories, resale price maintenance, or other restraints to prevent free riding by rival dealers. The legal treatments of these vertical restraints have evolved from per se illegality to broad acceptance. Exceptions to that acceptance in two recent cases, Poolcorp and MM Steel, can occur when economic analysis is either attenuated or dispensed with. This paper suggests that failure to analysis the economics of such cases with care can lead to inefficient outcomes.

I. Introduction 1. Suppliers of goods and services and their distributors and dealers collaborate to put products on the market. Their relationships often involve vertical restraints that impose contractual limitations on one or both parties. For example, a distributor may agree not to sell the products of other suppliers, or a supplier may commit to sell its products exclusively through one dealership in a geographic or customer territory. These restraints were long considered to be restrictions on competition that disrupted free access to consumers and were therefore treated as per se violations of U.S. antitrust laws. For economists, the key question was the motivation of companies to consent to such limitations. For example, why would a producer accept a limitation on competition

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Kıvanç A. Kırgız, Howard P. Marvel, USA : The role of economic analysis in the assessment of vertical restraints, February 2017, Concurrences N° 1-2017, Art. N° 82413, www.concurrences.com

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