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Reseller Agreement Antitrust

12. 4. 2021, Written by 0 comment

A. No. The Leegin Supreme Court has recognized that, in some cases, minimum selling price agreements can have obvious anti-competitive effects that, depending on the rule of reason, can make them illegal. An example cited by the Court of Justice – a group of wholesalers who unite to set prices and promote this illegal request for an agreement or require a producer (or several producers) to help enforce the agreement by imposing a minimum resale price. This scenario would merit increased legal oversight by the courts. A: These provisions, known as „Most Favoured Nation Clauses“,“ are quite common. In general, an MFN promises that one party will treat the other party at least as well as it will treat it. In most cases, MFNs are a legitimate way to reduce risk. However, in certain circumstances, MFNs may unduly restrict the offer of targeted rebates and create a de facto price for the sector. The FTC challenged a clause in the MFN used by a network of pharmacies in individual contracts with its member pharmacies, which prevented it from cancelling reimbursement rates. The network consisted of a group of more than 95 percent of competing pharmacies in the state.

The MFN advised each pharmacy not to offer lower prices for another plan, as any discounts should be applied to all other sales on the network. The Court held that „vertical agreements on minimum resale prices may have pro-competitive or anti-competitive effects depending on the circumstances in which they are concluded.“ Therefore, these agreements should no longer be in themselves (or automatically) unlawful, as had been decided previously in dr. Miles. On the contrary, courts should apply the „reason“ rule to decide, on a case-by-case basis, whether some vertical price restriction is contrary to federal cartel law. It should be noted that the Court of Justice`s decision continues to leave vertical restrictions on the minimum price of resale prices open under the state`s rules on cartels and abuse of dominance. It is important that states do not always follow federal policy cases when enforcing their own cartel and abuse laws and therefore should not follow Leegin. Indeed, some states have legislation on cartels and abuse of dominance that explicitly excludes RPM programmes. As a result, some public authorities will apply the father rule to MPRs under national law.

The result is a patchwork of states that accept or reject Leegin`s approach to the application of state cartel law and abuse of dominant position. Therefore, before implementing an RPM program, counsel must carefully consider how each state treats PMPs, in part because national law evolves, verifies all the facts and verifies whether there is any of the factors described by the Supreme Court of Leegin or whether there are other signs that the proposed program will have anti-competitive effects rather than increase competition between brands. The agreement may require that the distributor be able to receive batches from the manufacturer only in certain storage locations or that the distributor be able to set up storage or resale offices only on specific sites. These restrictions may respond to the manufacturer`s desire to focus the distributor`s efforts on a specific geographic area, but they do not prevent the distributor from making certain sales volumes elsewhere. Location clauses present less risk in terms of cartels and abuse of dominance than exclusive agreements, since intra-brand intra-brand competition is not compartmentalized (see Sylvania, mentioned above). Sometimes the only deduction that is required is to sell the promise of the manufacturer itself not to sell in the geographic area or to certain categories of customers. These promises generally present a very low risk in terms of cartels and abuse of dominance. First, the antitrust rules most frequently invoked in distribution disputes are triggered by concerted activities. Section 1 of the Bundessherman Act (15 U.C No. 1) applies, for example, to a „contract