COMPETITION • EUROPEAN LAW • RESTRICTIVE AGREEMENTS
A vertical agreement between a supplier and distributor must not restrict the latter’s commercial freedom. In particular, the reseller must remain free to set its own resale prices. The direct or indirect imposition of a minimum retail price (resale price maintenance – RPM) is traditionally considered to be a serious infringement of the competition rules. The RPM clause constitutes a restriction of competition by object and cannot in principle be exempted. A supplier therefore engages in anticompetitive behavior when it imposes the setting of resale or discount prices at a specific level. However, only the imposition of a minimum price constitutes a hardcore restriction within the meaning of the Vertical Restraints Regulation: the supplier may, under Article 4 of the Regulation, set a maximum price or communicate to its distributor a recommended or indicative price, provided that it does not effectively impose compliance. Above 30% market share, the Commission specifies in its Guidelines on Vertical Restraints that the stronger the supplier’s position on the market, the greater the risk of reseller alignment. In that case, the recommended price is likely to lead to the setting of a uniform price level and thus fall under Article 101(1) TFEU.