11 January 2017
Policy Document Draft: Minimum Resale Price Maintenance shall be considered a Restrictive Agreement unless Competitively Justified
The Antitrust Authority published today (Wednesday) a policy draft regarding minimum Resale Price Maintenance (RPM) by suppliers. The policy draft refers to arrangements in which a supplier dictates product price to the next entity in the supply chain (its customer).
The draft states that price maintenance arrangement between a supplier and a retailer shall be considered a restrictive arrangement, unless: (a) the arrangement does not undermine competition in a specific market (for example, when there is strong inter-brand competition, and the arrangement does not facilitate a coordinated equilibrium); and (b) the purpose of the arrangement is to achieve clear pro-competitive benefits (such as encouraging retailers' investment in product promotion through providing accompanying services, when required in accordance with the nature of the product and the inter-brand competition).
The policy draft focuses on arrangements in which the supplier determines a minimum or fixed price (minimum RPM or fixed RPM). The aim of the public statement is to shed light on how the Authority intends to examine such arrangements, and to clarify that such arrangements will be examined more strictly than other vertical arrangements. The reason that price maintenance arrangements will be treated more severely is because the direct result of such arrangements is to harm intra-brand competition – that is, competition between retailers selling the same product of a supplier.
Publishing the policy draft was necessary following the judgement of the Supreme Court regarding Shufersal. The judgement regarding Shufersal ruled that vertical arrangements (meaning arrangements between supplier and customer), including minimum Resale Price Maintenance, are to be examined according to their possible negative impact on competition. This judgement changed the legal situation which had existed until then, under which such arrangements were completely prohibited, regardless of their negative impact on competition. It was therefore necessary to clarify the position of the Authority regarding Resale Price Maintenance arrangements, and specify the special circumstances under which such arrangements may not be considered prohibited restrictive arrangements.
The policy draft also addresses Resale Price Maintenance arrangements that are not related to the retail sector, and clarifies that such arrangements will be examined in accordance with the relations between the supplier and the distributer, as specified in the draft. Reference is also made to maximum RPM and to price recommendations that are not considered price maintenance arrangements.
The draft statement is based on extensive research work conducted by the Competition Division of the Authority.
The policy draft is available to the public, and comments regarding it may be submitted by 22/2/2017. The draft is also expected to be discussed in one of the panels at the annual conference of the Antitrust Authority, to be held on 24/1/2017.