An economic approach to parallel imports effects and competition policy

Abstract

Parallel imports have been treated very differently in different countries. In the EU, competition law's very strong (per se) prohibition of restrictions to parallel imports (PI) can be justified by traditional "public interest" concerns related to the EU's objective to promote free trade and market integration. At the opposite extreme, we have had Russia’s Per Se prohibitions of PI, which can be potentially justified by the country's industrial policy objectives of protecting its domestic industries. While there is no evidence of a shift in policy by the European Commission (EC) and the EU, there is evidence of a shift in policy in Russia away from the per se prohibition of PI and a recognition that "in some cases" PI should be considered legal. We consider this shift in Russian policy as a shift in the right direction, while we consider unjustified the continuation of EC policy of per se prohibition of restrictions to PI. Our analysis points towards a middle ground in which any question of whether restrictions of PI must be prohibited or not should be the subject of rule-of-reason investigations of the specific economic facts of each case and what these imply for welfare (and, specifically, consumer welfare).