Obstacles to parallel trade under EC competition law : the case for allowing absolute territorial protection

Abstract

Parallel trade involves the importation of genuine products into a particular country by unauthorised resellers, thus undermining the exclusivity conferred by the manufacturer upon incumbent distributors. While the EC Commission and Community Courts have traditionally adopted an approach of per se illegality towards restraints on parallel trade, modem economic theory advocates a case-by-case market analysis which considers the potential efficiency-enhancing effects of such restraints as well as their anti-competitive impact. This dissertation provides an overview of the treatment of restraints on parallel trade under EC competition policy, critically analysing such treatment in the light of modem economic theory and recent empirical studies concerning the impact of parallel trade on short and long term consumer welfare. It is generally argued that, by attributing overriding importance to fostering market integration and disregarding important economic insight, EC competition policy towards territorial restraints may ultimately have the effect of inhibiting pro competitive business arrangements which encourage the proliferation of new products throughout the Community.