The Vertical Regulation of Economics in the EU: Ten Years of Experience

This article suggests adoption of legal certainty from the market share threshold test used in the EU vertical regulation. In addition, the strait-jacket effects from the current provision on vertical restraints can be resolved through a balance or trade-off between inter- and intra-brand competitions. The trade-off between inter- and intra-brand competitions in vertical agree- ments is not an easy task for competition authorities. However, the proof of anti-competitive effects of vertical restraints should be examined by determining market power and efficiency rather than a simple categorisation of per se rule, especially on minimum RPM. In particular, the examples of the EU block exemption and the US rule of reason give a clear indication of evolving vertical restraints. This article thus proposed a new style of structured vertical guidance that includes market share threshold safe harbour with efficiency justification. Many argue that a balance test of rule of reason analysis is less predictable than that of per se rule, but rule of reason is likely to improve welfare on average. In the real world, there is no absolutely best solution, and the legal technique of block exemption system may also have some problems. However, the adoption of this proposal with some modification will offer the Korean competition jurisdiction a better-off. A new approach of the clear standards based on a market share threshold test would make the KFTC's implementation of the provisions on vertical restraints more effective.