Commercial negotiations between manufacturers and retailers necessarily involve a discussion of wholesale prices, but they may also involve a discussion of potential retail prices, including recommendations of retail prices by manufacturers (RRPs). Retail prices not only determine how much money a retailer will make, but also how much product the manufacturer will sell. Furthermore large retailers may have little idea of how to price specialist products, something on which manufacturers have often undertaken significant amounts of research.
In this memo, Matthew Bennett discusses the recent interest by competition authorities in vertical communications between manufacturers and retailers, and explains the dangers of conflating Recommended Retail Prices, which are relatively common and pro-competitive, with Retail Price Maintenance, which is treated as a hard-core competition law infringement in Europe.
