Evaluating Economic Analyses of RPM in Shanghai High Court’s Decision of Rainbow v. Johnson & Johnson

Aug 20, 2013

Dr. Fei Deng commented on China’s first resale price maintenance (RPM) case, Rainbow v. Johnson & Johnson, in an article titled "Evaluating Economic Analyses of RPM in Shanghai High Court’s Decision of Rainbow v. Johnson & Johnson" at the invitation of Caixin.com columnist, Litong Chen. 

On August 1, 2013, at the five year anniversary of China’s Anti-Monopoly Law, the Shanghai High People’s Court issued a final decision, ruling in favor of the plaintiff Rainbow, a former distributor of Johnson & Johnson’s medical products in China, reversing the lower court’s decision.  Economic experts had been hired by both parties, and analyzed key issues including market definition, Johnson & Johnson’s market power, and the extent of competition in the relevant market, and anti-competitive and pro-competitive effects of the RPM conduct. The court decision provides a summary of both experts’ analyses and the court’s opinion on these issues.

In this article, Dr. Deng evaluates and comments on the analyses conducted by the parties’ economic experts and the court’s decision. She suggests that the evaluation of anti-competitive versus pro-competitive effects should have used consumer welfare as the criterion, instead of prices, and that additional empirical analyses such as an output test could have been performed to strengthen the defendant’s position.

This article is written in Chinese and was published by Caixin.com on August 20, 2013. Access the article here

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