Antitrust Laws And Regulations On Resale Price Maintenance In Digital Markets

The new Internet era moves transactions from brick-and-mortar to online platforms,while the blur of market boundaries and its dynamic competition feature create new challenges to antitrust regulations.For Resale Price Maintenance(hereinafter "RPM"),first,the strong network effect of digital market strengths negative externality for non-platform retailers,which enables the platform retailers to enjoy the benefit of network effect without over-competition and it is unfair.Second,due to the convenience of Internet,information asymmetry problem incurred in traditional markets could be solved by a simple search.When consumers learn about the products,the free-riding defense for traditional RPM kind of loses its justification.Third,the application of artificial intelligence and algorithm enables the parties of RPM to quickly detect pricing cheating and respond,which on the other hand,make it easier for implied conspiracy.And that makes it harder for antitrust enforcement.For all those challenges mentioned above,the United States has acted in legislation,administration.As of jurisdiction,there are different voices advocating a new rule on RPM.In fact,the Federal Trade Commission(hereinafter "the FTC")has introduced The Algorithmic Accountability Act in 2019,but it would take up to months or even years to get final published.In 2020,senator Sherrod Brown introduced a bill entitled the Data Accountability and Transparency,requiring regulations on automated decision systems,but it’s not final yet.Considering the fact that the digital economy is developing so fast that legislation would always encounter challenges that it can’t fix,and the written law itself should also leave some flexibility for courts to explain.Therefore,the improvement in administration and jurisdiction has a brighter future.The dynamic competition of digital market not only creates difficulty for RPM detection and possibility for implied conspiracy,but also makes it harder for courts and public enforcement departments to rule and regulate RPM.The current rule for RPM is the Rule of Reason,plaintiff bears the burden of proof.It brings great pressure for the plaintiff because it needs to gather enough evidence,proving the anti-competition effect of RPM,and to rebut the justification brought by the defendant.While the application of pricing algorithm and the unique feature of digital market make it more difficult on proving those elements.For an individual,it lacks ability to get evidence compared with a public enforcer,adding up the cost of a litigation,it would smash the positivity to bring one,thus further damages market competition.To solve this issue,some scholars think that the Rule of Illegality Presumption should be applied instead of the Rule of Reason.Based on the illegality presumption and through the debate of litigation parties,defendant bears more burden to prove the justification of RPM.On the one hand,it lessens the pressure of the plaintiff,which encourages an individual plaintiff to bring an antitrust litigation.On the other hand,the substantial elements could also be satisfied through the constant debate.Artificial intelligence and the application of pricing algorithm make it difficult for the FTC and Antitrust Division of Department of Justice(hereinafter "DOJ")to detect because they allow corporations to quickly notice and change the price so as to avoid the risk of being investigated when there’s pricing cheating.Scholars in the United States suggest that the FTC and DOJ Antitrust Division should strength antitrust interference and public enforcement by adding market structure to the current analysis system,which requires consumer welfare and economic efficiency.Some other scholars suggest that the recent sanction on online RPM using pricing algorithm by the European Union(hereinafter "EU")provides a fresh perspective,pointing out that using algorithm against algorithm could also be a solution.More importantly,individual litigation and public enforcement have unique emphasis on antitrust regulation.So the antitrust investigation report by the House of Representatives suggest to encourage individual litigation and better regulate unreasonable monopoly business conducts by eliminating obstacles such as mandatory arbitration clause,limits on class action formation,judicially created standards constraining what constitutes an antitrust injury and unduly high pleading standards.By legally interpretating the Sherman Act,Clayton Act and relevant cases,this thesis explains the meaning of vertical restraints and RPM.By case analysis,this thesis quotes famous cases on RPM in American judicial history and further clarify the rule on vertical restraint and RPM.By comparing transaction modes in traditional markets and digital markets,this thesis points out the challenges and new issues need to be solved.And by analyzing EU’s sanction on online RPM using pricing algorithm,it comes up with suggestions for the U.S.antitrust enforcement.By legal research,this thesis learns from the U.S.antitrust laws,cases,antitrust investigation reports and previous articles and papers on RPM and digital markets,providing a new perspective and thoughts on how would U.S.better regulate RPM in digital markets.This thesis contains six parts.Part one is preface.Part two introduces RPM and digital market and the challenges digital markets brings to the antitrust regulation on RPM.Part three introduces the development of the economic theory and judicial rule on RPM,and further comes up with some thoughts of improvement on the current rule.Part four introduces the antitrust enforcement in the digital market,elaborating the widely-used settlement by quoting Microsoft.It further brings up the unique difficulty public enforcement would encounter and provides some thoughts.Part five concludes the progress of American antitrust in legislation,administration and jurisdiction and provides a new perspective by introducing EU’s sanction on online RPM using pricing algorithm.Part six concludes.