Contextualización de la ISP
B.3 Los servicios médicos
This chapter examined the horizontal collusion theory of RPM both in the offline and the online context. The argument that vertical price fixing may facilitate a collusive agreement in either the upstream or the downstream market is undoubtedly the most oft-cited objection to vertical price fixing and has recently been reiterated in studies by Jullien and Rey169 and Rey and Vergé.170 These academic assertions, however, insightful though they may be, lack practical support from credible empirical evidence. This comes as no surprise; the controversy surrounding vertical price fixing would not be nearly as intense, I reckon, were it not for the remarkable inconsistency between theory and practice.
168 See Leegin Creative Leather Products, Inc v PSKS, Inc, 551 US 877, 896 (2007) (citations omitted).
169 B Jullien and P Rey, supra n 59.
170 P Rey and T Vergé, ‘Resale Price Maintenance and Interlocking Relationships’ [2010] 58 J Ind Econ 928, discussed in the previous chapter.
134 To the manufacturer cartel objection, Scherer and Ross – whose work stands out as one of the most sober and holistic accounts of the economic effects of RPM – respond that
‘[a]lthough the logic is persuasive, there are few documented cases of the use of RPM to strengthen manufacturer cartels. Also, a quantitative analysis of U.S.
manufacturing industries in which RPM was actively employed suggests that in most, concentration ratios were too low to believe that price-fixing conspiracies were likely to thrive’.171
In addition, it should be reminded that the formal model presented by Jullien and Rey in support of this theory does not lead to unequivocal normative conclusions.172 The authors conclude that price floors do not always facilitate collusion; under specific circumstances they may even make it harder. More specifically, where the discount factor is too large, the manufacturers do not need RPM in order to sustain prices close to the monopoly level; inversely, where the discount factor is too low and RPM is implemented, the short-run gain from deviation will be higher and the long-run cost of defection lower.173
Another point to consider is that these theoretical models assume publicly observable wholesale contracts.174 While full observability may indeed be possible in highly concentrated markets, it is still necessary to take into account the facts specific to the case at hand and the economic context in which the agreement operates in order to reach safe conclusions as to the impact of price floors on competition between manufacturers. It is, for example, conceivable that the commitment value of vertical restraints imposed to facilitate collusion, such as RPM, may be eliminated if manufacturers have the ability to draft non-linear wholesale contracts which are unobservable to rivals.175
As far as collusion in the downstream market is concerned, the only ‘solid’
empirical evidence used to demonstrate the anti-competitive potential of RPM is provided in the paper by Biscourp et al, in which the authors examine the impact of the Galland Act on retail prices in France. The Act effectively prohibited the resale of the contract goods to end users at a price lower than that quoted in the invoice produced at the time of delivery.
171 FM Scherer and D Ross, Industrial Market Structure and Economic Performance (3rd edn, Houghton Mifflin Company 1990), p 550.
172 B Jullien and P Rey, supra n 59.
173 Ibid, 992.
174 See, eg, P Rey and T Vergé, supra n 170, 934.
175 Note by the United States in OECD, ‘Policy Roundtables: Vertical Restraints for On-Line Sales’, supra n 99, p 158.
135 The paper essentially deals with a statute the effects of which may resemble those of industry-wide RPM in the event that all market participants had the incentive to impose price floors and, as such, is of exceptionally limited normative value: it only stands for the proposition that unequivocal legality of RPM is unwarranted. Other than this unambiguous assumption, I find it difficult to identify its contribution to the existing literature on vertical price fixing. The authors refrain from explaining why their findings are more consistent with the effects of RPM than, for example, those of an outright dealer cartel. Certainly collective enforcement of vertical price fixing is generally meaningful only as a facilitating mechanism for upstream or downstream cartels but, in equating an across-the-board statutory prohibition on rebates with the individual incentives of profit-maximising economic actors, the authors assume that competitors are both willing and able to collude under any circumstances, and that collusion is invariably profitable.
The industry-wide implementation of RPM policies assumed by Biscourp et al is severely undermined by empirical evidence from the ‘Fair Trade’ era, which demonstrates beyond any doubt that, even in the face of a general leniency towards vertical price fixing, the practice is used only marginally by only a fraction of manufacturers. Overstreet estimates that fraction as representing ‘no more than one percent of manufacturers, accounting for no more than ten percent of consumer good purchases’,176 while Scherer and Ross, relying on a number of similar studies, note that, in their heyday, RPM policies covered a fraction of retail sales ‘variously estimated at from 4 to 10 percent’.177 Even nowadays, as will be argued later in this thesis,178 the body of federal antitrust litigation in the US almost a decade after Leegin is so limited that it can be concluded with a reasonable degree of certainty that the abolition of the per se ban on vertical price fixing has not led to a dramatic increase in the use of the relevant clauses. To the extent that, on the basis of empirical data, a more permissive policy towards RPM cannot be expected to produce as far reaching welfare consequences as an outright statutory prohibition of discounts, the implications of the study by Biscourp et al should be regarded as limited to the effects of the Galland Act and its conclusions should not be extended to RPM.
There is another side to this however. The Galland Act was obviously an exogenous source of price floors and, as such, its effect cannot be fully consistent with the traditional pro-competitive theories of RPM, which are based on the assumption that price
176 TR Overstreet, Resale Price Maintenance: Economic Theories and Empirical Evidence (FTC Bureau of Economics Staff Report, Nov 1983), p 169.
177 FM Scherer and D Ross, supra n 171, p 549.
178 See infra s 5.3.
136 floors are imposed (voluntarily) by an independent manufacturer in an attempt to align its interests with those of consumers, thus also making the latter better off. In a paper summarising and assessing the existing body of empirical evidence on vertical restraints in general, including RPM, Lafontaine and Slade179 noted that price floors imposed voluntarily by manufacturers had a net positive effect on consumer welfare, thus confirming the traditional Chicagoan rubric that the interests of end users are congruent with manufacturer profits. What is indeed revealing about this study, however, is that vertical restraints imposed exogenously (namely through governmental intervention, as in the case of the Galland Act), the consumers were typically made worse off, as the consistent consequences of these exogenous restraints were ‘higher prices, higher costs shorter hours of operation, and lower consumption as well as lower upstream profits’.180
To make this point even clearer, to the inconclusive and not particularly instructive assumptions of Biscourp et al one can juxtapose empirical evidence from actual RPM cases. In a paper published two years prior to the Supreme Court’s Leegin decision, Cooper et al reviewed the empirical literature on vertical restraints – including, of course, RPM – and vertical integration published between 1984 and 2005, and concluded that, not only did most relevant studies demonstrate that vertical restraints and vertical integration in general had produced efficiency-enhancing effects, but also that there were hardly any cases where forms of vertical control were found to be ‘unambiguously anticompetitive’.181 In fact, despite any theoretical academic assertions to the contrary, ‘virtually no studies can claim to have identified instances where vertical practices were likely to have harmed competition’.182 The same conclusion is reached by O’Brien in a brief prepared for the Swedish Competition Authority: ‘[w]ith few exceptions, the literature does not support the view that these practices are used for anticompetitive reasons. The literature supports a fairly strong prior belief that these practices are unlikely to be anti-competitive in most cases’.183
179 F Lafontaine and M Slade, ‘Exclusive Contracts and Vertical Restraints: Empirical Evidence and Public Policy’ in P Buccirossi (ed), Handbook of Antitrust Economics (The MIT Press 2008), pp 405-408.
180 Ibid, p 408 (emphasis added). The authors note that the same results were observed in situations where pressure for governmental intervention came not only from downstream firms, by also from consumers themselves.
181 JC Cooper, LM Froeb, D O’Brien and MG Vita, ‘Vertical Antitrust Policy as a Problem of Inference’
[2005] 23 Int’l J Indus Org 639, 658.
182 Ibid.
183 DP O’Brien, ‘The Antitrust Treatment of Vertical Restraints: Beyond the Possibility Theorems’, in Report, The Pros and Cons of Vertical Restraints (Konkurrensverket – Swedish Competition Authority 2008), p 76, available at http://www.konkurrensverket.se/globalassets/english/research/report-the-pros-and-cons-of-vertical-restraints-18mb.pdf (last accessed on 14 November 2015).
137 Interestingly, even empirical evidence suggesting that a more relaxed normative approach to price floors may result in a loss in consumer welfare provides no support for the horizontal collusion story. In a recent study, MacKay and Smith, despite contending that ‘a more favorable legal environment for RPM’ is associated with net anti-competitive effects reflected in price increases and output decreases, nonetheless take the view that their analysis offers ‘little evidence for the broad applicability of any particular theory’, whether pro- or anti-competitive.184 More specifically, according to the authors the available data do not support the manufacturer collusion theory, and provide only ‘weak support’ for the downstream collusion theory.185
At the same time, it appears that the price transparency which is prevalent in the e-marketplace further undermines the horizontal collusion objection to RPM. In accordance with the OECD’s recent report on vertical restraints in the online context, and in light of the preceding analysis which demonstrated the existence of powerful Internet outlets which serve as market leaders, it is submitted here that that price rigidity in the digital environment is considerably more likely than initially thought, and in a number of markets it is conceivable that a possible implementation of specific price floors may be unlikely to be more effective in facilitating cartels or tacit coordination. Symmetrically to the reduction of consumer search costs, the Internet also contributes to a significant decrease in the cost of monitoring any deviations from the collusive agreement, thus essentially rendering RPM redundant as a policing mechanism.
Additionally, the pro-competitive justifications for vertical price fixing apply with equal force across all distribution channels. The fact that online retailers may offer considerably lower prices does not necessarily imply that the stimulation of intrabrand price competition makes consumers invariably better off. In markets where non-price competition is prominent, the emergence of e-commerce has obviously not reduced the need for tangible product-specific promotional services. While the horizontal collusion theory reliably supports the argument for a more cautious approach to RPM, it is submitted here that sound antitrust policy should be based on a rebuttable presumption of illegality.
184 A MacKay and DA Smith, supra n 123.
185 Ibid, pp 18-19.
138