Announcing the Death of Colgate: The Form and Substance of Vertical Price Fixing Agreements

92 Pages Posted: 20 Mar 2018 Last revised: 13 Apr 2018

Thomas K. Cheng

The University of Hong Kong - Faculty of Law

Date Written: March 15, 2017

Abstract

This Article examines the agreement requirement in resale price maintenance (“RPM”) cases and the longstanding exception to the ban on RPM under the Colgate doctrine. It argues for the abolition of the doctrine for a number of reasons. First, there are no persuasive theoretical justifications for requiring an agreement in RPM cases as the most relevant purpose served by an agreement requirement under antitrust law does not apply to RPM. Second, there is no logically coherent and theoretically sound theory of agreement under the doctrine, which means that there is no principled way to apply the agreement concept in RPM cases. Third, there is no sound economic basis for requiring an agreement in RPM cases as none of the main theories of harm and pro-competitive justifications of RPM is premised on an agreement. Finally, it is argued that the Colgate doctrine has provided a highly unsatisfactory safe harbor for businesses to implement RPM due to costs and manpower involved in complying with the jurisprudence under Colgate. This Article also argues that dealer termination requires a different treatment from that accorded by Monsanto and Business Electronics after Leegin and proposes a framework for determining the legality of dealer termination independent of the existence of an RPM scheme.

Keywords: RPM, Vertical Price Fixing, Colgate Doctrine, Proof of Vertical Price Fixing Agreement

Suggested Citation

Cheng, Thomas K., Announcing the Death of Colgate: The Form and Substance of Vertical Price Fixing Agreements (March 15, 2017). 20(1) U. Penn J. Bus. L. 1-92; University of Hong Kong Faculty of Law Research Paper No. 2018/018. Available at SSRN: https://ssrn.com/abstract=3141328

Thomas K. Cheng (Contact Author)

The University of Hong Kong - Faculty of Law ( email )

Pokfulam Road
Hong Kong, Hong Kong
China

HOME PAGE: http://hub.hku.hk/rp/rp01242

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