| Price is the core factor of the competition. From the consumers' perspective, consumers can benefit from cheaper price and good service. In the modern commercial society of the globalization era, on the one hand, because competition is more intense than before at the retailer level, retailers are unlikely to follow the distribution system provided by manufacturer in up stream market. On the other hand, manufacturers are eager to maximize their profit by controlling their distributors and retailers through vertical restraints. RPM has been recognized as an efficient tool to control distributorship for manufacturers. However, price fixing deprives the wholesalers or retailers of their free price rights, weakens the price's function of representing the supply and demand information, and subsequently hinders the operation of the market competitiveness mechanism. In addition, the restrained price greatly excesses the price level under the effective competitiveness, which severely damages consumers' interests. In order to overcome the restraint competitiveness and to ensure the commercial market pattern's energy under the regulation of RPM, it makes extremely important to investigate RPM and construct the appropriate institution adaptable to Chinese features. The aim of this thesis is to demonstrate the negative side-effects of market competitiveness influenced by RPM, and the rationality of RPM as illegal behavior. Further, I make some suggestions as for designing the specific rules for China's antitrust. Chapter one compares each nation's legislation and different scholars' theories, generalizing the important characters of RPM, and defining RPM as an agreement among the bargainers who are at different levels of the same industry. The agreement emphasizes that when the products are resold to or by a third people, the price should be maintained at a certain level. Moreover, Chapter one suggests two disadvantages of RPM. That is, it restrains the sellers' free price rights, the price competitiveness among sellers, and the subsequent influence in the consumers' price expense. Chapter two investigates some theories which argue against RPM, such as Restraint on alienation and Theory of Collusion, and some others which argue for RPM, such as Free Rider Theory, and Dealer Service Theory. In this section, I analyze the economic foundation of RPM and conclude that although RPM increases the efficiency in some specific field and special context, from the general point of view, RPM theory did not provide enough credible explanation for its rationality. Chapter three focuses on the comparison and contrast as well as the historical analysis of each nation's regulation of RPM legislation. I suggest that in the global context, there is not a definite answer as for whether we should prohibit or loosen RPM. Consequently, different nations have different institutions regarding the regulation of RPM. In the U.S., since the Dr. Miles case, the courts have applied the per se standard of illegality to RPM. The per se standard assumes that the certain types of business arrangements are inherently anti-competitive and are rarely justified by legitimate business concerns, and therefore are per se unreasonable and illegal. On the contrary, under the rule of reason, the fact finder weighs all of the circumstance of a case in deciding whether a restrictive practice should be prohibited as imposing a reasonable restraint on competition. Since the 1970s, the effectiveness of vertical restraints has been recognized through economic analysis. In Sylvania case, the Supreme Court clearly acknowledged that non-price vertical restraints should be examined under the rule of reason, not prosecuted under the per se illegal rule. Some scholars argued that RPM should be also treated under the rule of reason. However, the general consensus among authorities is that RPM is treated as the per se illegal. However, European countries do not copy the U.S dichotomy of the per se illegal and rule of reason. Absorbing the advantages of the per se illegal a... |
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