Resale Price Maintenance (RPM): The U.S. and E.U. perspectives

Resale Price Maintenance (RPM) is an important and very controversial pricing practice that describes attempts by upstream suppliers (often manufacturers) to control selling prices of their customers (often retailers or wholesaler). It was developed in the early 1900s to regulate and eliminate unfair trade practices within distribution channels in U.S. Although RPM has been analyzed from many different perspectives since it is inception, many questions remain. Whether RPM is good for competition and which forms are legal is still unclear. The study provides the historic evolution of the RPM concept and discusses some alternative strategies by which marketers have attempted to achieve the same ends. The study′s review includes landmark legal rulings and an overview of the relevant marketing and economic theory guiding the evaluation of RPM′s effect on markets and competition both in U.S. and E.U. The study, finally, addresses a road-map how to handle RPM rulings side effects for marketing patricians, academics and regulators.