Ex-Ante and Ex-Post Control of Buyer Power

33 Pages Posted: 13 May 2015 Last revised: 16 Feb 2018

See all articles by Stefan Thomas

Stefan Thomas

University of Tuebingen - Faculty of Law

Date Written: January 18, 2018

Abstract

This paper considers the effects of buyer power under the antitrust laws. It focuses on EU antitrust law, namely Article 102 TFEU and the EU Merger Control Regulation, while taking into account the stance of US antitrust law. Recent investigations of several European antitrust authorities in the grocery sector have expressed concerns that concentration on the demand side can result in market foreclosure or anticompetitive exploitation of market participants. Also, in the US there is an ongoing debate about the anticompetitive and procompetitive effects of buyer power, which is inter alia reflected in the landmark decision of the US Supreme Court in Weyerhaeuser and in the merger control policies of the DOJ and the FTC. Against this background, the present paper starts with the definition of buyer power. It underscores the necessity to distinguish between single price monopsony on the one hand and individual bargaining power on the other hand, since the economic effects of these two types of buyer power deviate significantly. In subsequent steps, the paper analyses different theories of harm that can be raised with respect to buyer power. It discusses the effects of buyer power on allocative efficiency, dynamic efficiency as well as consumer welfare and draws conclusions from that for the enforcement of the antitrust laws.

Keywords: buyer power, monopsony, abuse of dominance, merger control, waterbed effect, spiral effect, allocative efficiency, dynamic efficiency, consumer welfare

JEL Classification: K21, L41

Suggested Citation

Thomas, Stefan, Ex-Ante and Ex-Post Control of Buyer Power (January 18, 2018). Available at SSRN: https://ssrn.com/abstract=2605577 or http://dx.doi.org/10.2139/ssrn.2605577

Stefan Thomas (Contact Author)

University of Tuebingen - Faculty of Law ( email )

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Germany
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0049-7071-29-2105 (Fax)

HOME PAGE: http://www.jura.uni-tuebingen.de/professoren_und_dozenten/thomas

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