Competitive Exclusion in Category Captain Arrangements
142 Pages Posted: 22 Aug 2019
Date Written: April 19, 2019
Category management is a retail practice wherein the products of a retail establishment are divided up into different categories and then managed as if each were a free-standing business. The most popular approach to category management involves outsourcing decisions to a single manufacturer in the category (a.k.a., the “category captain”). Category management and category captain arrangements can benefit competition and consumers where they help to enhance the efficiency and effectiveness of retail decision making. However, given their potential to adversely affect competition and consumers, category captain arrangements have attracted the attention of public policy makers, antitrust enforcement authorities, and marketing and legal scholars. At least two types of competition-related concerns are identified for category captain arrangements. One concern is that a category captain will use its role to coordinate competitor behavior resulting in anticompetitive collusion. A second concern is that a captain will use its role to disadvantage competitors leading to anticompetitive exclusion. This monograph focuses on anticompetitive exclusion. Despite expressed concerns for anticompetitive exclusion involving category captain arrangements research offers surprisingly few insights into the issue. The application of antitrust law to category management also continues to remain relatively undeveloped leaving practitioners with little guidance on what is permissible. Given this state of affairs continued effort is required to better understand the nature and competitive consequences of category management and category captain arrangements. The goal of this monograph is to offer this understanding. Chapter 1 offers an extended introduction to the topic. Chapter 2 describes and elaborates on the nature and practice of category management. Chapter 3 then describes the approach to category management found in category captain arrangements. The key sources of competitive concern for category captain arrangements are identified and elaborated upon in Chapter 4. With the antitrust importance of understanding the power of an organization to harm competition, emphasis and discussion is given to the nature and sources of power and influence held by category captains in Chapter 5. This is followed by Chapter 6 which identifies, organizes and describes the types of exclusionary conduct and practices that may be found in category captain arrangements. Managerial safeguards against competitive exclusion involving category captains are then identified, organized and described in Chapter 7. The effects for competition and consumers that can result from competitive exclusion involving category captains are described in Chapter 8. The findings of empirical research on competitive exclusion in category captain arrangements are then described in Chapter 9. A brief conclusion to the monograph is provided in Chapter 10. The monograph is comprehensively annotated with citations in order to serve as a resource for interested readers.
Keywords: category captain, category management, retailing, retail strategy, competitive exclusion, competition, antitrust, marketing
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