Written Submission to OECD Roundtable on RPM Sample Clauses

Written Submission to OECD Roundtable on RPM. In October 2008, the OECD Competition Committee discussed the positive and negative effects of RPM, in which U. S. delegates submitted a paper representing their perspectives on antitrust enforcement in the U.S.. After concluding that both theoretical economic literatures related to RPM and available empirical evidence, regarding the effects of RPM, support an analysis of RPM under the rule of reason, the federal enforcers identify some practical points for enforcing the rule. At first, they examine the possibility of manufacturer or retailer cartel by checking whether RPM is widespread in the industry in question. If few manufacturers have RPM agreements in place with their retailers, or if few retailers enter into RPM agreement with a given manufacturer, then the enforcers are of the opinion that RPM does not contribute to help enforce a cartel.52）Next, they evaluate whether the manufacturer in question possesses meaningful market power in the relevant market. If it does not, they doubt that retailer cartel will succeed because the retailer cartel might not be able to earn supracompetitive profits in facing vigorous interbrand competition.53）The absence of market power would also prevent a manufacturer from using RPM in an exclusive fashion, because the presence of robust competition from other brands enables consumers to switch to one of the alternatives. Therefore, they assume that a manufacturer’s decision to adopt RPM in a competitive market is likely to reflect an effort to improve its ability to compete.54） Although the federal enforcers state that the existence of market power is a useful screen to determine whether a closer scrutiny of the actual effects of RPM on consumers is warranted, they note that it would be inappropriate to conclude merely from a finding that the manufacturer possessed market power, that its use of RPM is likely to harm consumers.55）In this case, reliable evidence - for example, a finding that RPM caused sales of the manufacturer’s product to increase - would be crucial to the assessment of its competitive effect.56）The fact that RPM contributed to sales increase would also be strong evidence against hypothesis that its purpose was to sustain a cartel among either retailers or manufacturers.57） As for the frequent concern that RPM will lead to higher prices for consumers, the paper submitted to OECD points out that a direct examination of the effect of RPM on retail prices would be useful and important to help discern whet...