Are Price Parity Clauses Necessarily Anticompetitive?

By Thibaud Vergé

Price parity clauses have recently triggered several antitrust investigations. Although decisions in similar markets have sometimes been conflicting, the agencies tend to rely on the same theory of harm. In this paper, I revisit the recent economic (theoretical and empirical) literature which allows me to identify some of the crucial factors that may lead to anticompetitive effects of such clauses: price parity clauses are more likely to be harmful when suppliers cannot credibly threaten platforms to stop using them in case commissions are seen as excessive. This will occur for instance when the diversion from intermediation platforms to the suppliers’ direct sales channel (e.g. own website) is weak.