Antitrust Law and Competition for Distribution
Joshua D. Wright
Federal Trade Commission; George Mason University School of Law
Yale Journal on Regulation, Vol. 23, No. 2, Summer 2006, pp. 169-208
George Mason Law & Economics Research Paper No. 05-28
An unsettled area of antitrust law is the regulation of the competitive process for product distribution and promotion. Competition for distribution involves vertical contracting with respect to product placement, promotional activity, or the decision to carry a particular product. This process includes controversial practices recently subject to intense scrutiny such as slotting allowances, loyalty discounts, bundled rebates, category management and exclusive dealing. Antitrust law has designed rules for each of these practices independently, ignoring the economic relationships between these business practices. This paper examines those relationships by focusing on the economics of competition for distribution. Viewing these practices as part of the competitive process for distribution exposes an antitrust policy that systematically mishandles the regulation of these contracts. The article concludes by arguing in favor of per se legality for distribution contracts foreclosing less than 40% of the market and agreements less than one year in duration.
Number of Pages in PDF File: 40
Keywords: Antitrust, monopolization, category management, competition for distribution, exclusive dealing, shelf space, slotting allowances
JEL Classification: K21, L41, L42
Date posted: September 8, 2005
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