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Selective Distribution, Refusal to Sell and the Monopolies and Mergers Commission

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  • Michael Utton

Abstract

Refusal to sell to 'unauthorised' dealers is an integral part of a selective distribution system. Under such a system manufacturers authorise only those dealers meeting their specific requirements. Where the market involved is 'reasonably competitive' it is widely recognised that manufacturers, dealers and consumers can gain. The British Monopolies and Mergers Commission (MMC) has been criticised for its interpretation of what constitutes a 'reasonably competitive' market. In a recent report into the supply of fine fragrances the issue was again central to its findings that the selective distribution system was not against the public interest. The European Commission has also recently granted exemption from Article 85 for the distribution system operated by the leading firms. We argue that the MMCs analysis of competition was again flawed in this case and that the danger to the consumer and new entrants is compounded by the Europe-wide exemption.

Suggested Citation

  • Michael Utton, 1996. "Selective Distribution, Refusal to Sell and the Monopolies and Mergers Commission," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 3(1), pages 43-55.
    • Handle: RePEc:taf:ijecbs:v:3:y:1996:i:1:p:43-55
    DOI: 10.1080/758533487
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    References listed on IDEAS

    as
    1. Klein, Benjamin & Murphy, Kevin M, 1988. "Vertical Restraints as Contract Enforcement Mechanisms," Journal of Law and Economics, University of Chicago Press, vol. 31(2), pages 265-297, October.
    2. J A Kay & T A E Sharpe, 1982. "The anti-competitive practice," Fiscal Studies, Institute for Fiscal Studies, vol. 3(3), pages 191-198, November.
    3. George Hay, 1985. "Vertical restraints," Fiscal Studies, Institute for Fiscal Studies, vol. 6(3), pages 37-50, August.
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    Cited by:

    1. Spiegel, Yossi & Yehezkel, Yaron, 2003. "Price and non-price restraints when retailers are vertically differentiated," International Journal of Industrial Organization, Elsevier, vol. 21(7), pages 923-947, September.
    2. Michael Utton, 2000. "Fifty Years of U.K. Competition Policy," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 16(3), pages 267-285, May.

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    More about this item

    Keywords

    Refusal to sell; Selective distribution; Vertical restraints index; 'Grey' market supplies; Reasonable competition; JEL classifications: LI 2; L42; L66;
    All these keywords.

    JEL classification:

    • L42 - Industrial Organization - - Antitrust Issues and Policies - - - Vertical Restraints; Resale Price Maintenance; Quantity Discounts
    • L66 - Industrial Organization - - Industry Studies: Manufacturing - - - Food; Beverages; Cosmetics; Tobacco

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