The debate about vertical restraints is heating up in the EU. The latest issue of the European Competition Journal (April 2009) contains two articles considering the economic aspects of this topic. One is authored by Coscelli, Buettner, Vergé and Winer (the CRA paper), as part of an exercise conducted on behalf of the LVMH Group. The CRA paper claims that vertical restraints are adopted by suppliers in the interests of consumers. The following article, authored by Sidley lawyers and economist, is an effort to formulate a practical approach to a real problem. It looks at the CRA paper’s arguments and finds that various key conclusions of the paper are either plainly wrong or at least dubious and should not be attributed to mainstream economics. In contrast to the CRA paper, our article also looks at what is happening in the real world and finds that policymakers are well-advised to adopt a cautionary approach to vertical restraints and internet restrictions.
A version of the CRA paper has previously been posted on the European Commission’s website:
http://ec.europa.eu/competition/consultations/2008_online_commerce/index.html (see LVMH economic analysis)