RPM and the Rule of Reason: Ready or Not,Here We Come?

Abstract

We argue that a structured rule of reason, anchored by a rebuttable presumption of illegality, is the appropriate legal standard for analyzing resale price maintenance (RPM) agreements between manufacturers and retailers. A presumption in favor of consumers is especially necessary in light of the transformative possibilities of e-commerce. Internet-based retailing innovations are likely to promote price-reducing distribution efficiencies. The spread of RPM to the Internet, however, is likely to retard such innovation and suppress efficiencies. We also argue that RPM analysis focused solely on interbrand competition will be insufficient, misleading, and biased in favor of manufacturers. Consumers undeniably benefit from competition among rival distributors of consumer goods. The inter/intrabrand distinction is significant only in single-brand distribution channels. In any event, innovation competition is more important to economic progress than both inter- and intrabrand competition.