Cartels and Vertical Restraints: Horizontal and Vertical Working in Tandem

Antitrust Law Journal, Vol. 83, No. 1, 2020, pp. 15-40.

26 Pages Posted: 20 Dec 2023 Last revised: 23 Dec 2023

See all articles by Margaret C. Levenstein

Margaret C. Levenstein

University of Michigan at Ann Arbor - Survey Research Center; The Stephen M. Ross School of Business at the University of Michigan, Business Economics and Public Policy

Valerie Y. Suslow

Johns Hopkins University - Carey Business School

Date Written: May 1, 2020

Abstract

Our earlier examination of explicit horizontal European Commission (EC) cartel cases from the 1990s and early 2000s found that a surprisingly large fraction (one quarter) of cartels were making use of vertical relationships to sustain, and sometimes to disguise, their collusive behavior. The EC was not specifically searching for evidence of vertical restraints, as documenting such behavior was not necessary to make the legal case of a violation of competition rules against horizontal price-fixing or market allocation. Rather, documentation of vertical restraints occasionally appeared in the EC’s descriptions of the organization and functioning of each cartel. Observers often miss the role of vertical relationships because both the economic and legal frameworks encourage us to characterize interfirm relationships as either horizontal or vertical. In this paper we look more broadly for evidence of vertical relationships that support collusion, across other antitrust jurisdictions and legal regimes, as well as revisiting the EC cases. We find that horizontal and vertical relationships often work in tandem to enable anticompetitive behavior and reduce efficiency. We provide a classification of the types of vertical interactions that facilitate collusion, and then turn to a qualitative analysis of selected cartel cases to draw insight into how vertical restraints can be used to support a dampening of competition.

Note: 83 Antitrust Law Journal No. 1 (2020). Copyright 2020 American Bar Association. Reproduced by permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or downloaded or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.

Keywords: antitrust, price-fixing, cartels, collusion, vertical restraints

JEL Classification: L13, L41, L42

Suggested Citation

Levenstein, Margaret C. and Suslow, Valerie Y., Cartels and Vertical Restraints: Horizontal and Vertical Working in Tandem (May 1, 2020). Antitrust Law Journal, Vol. 83, No. 1, 2020, pp. 15-40., Available at SSRN: https://ssrn.com/abstract=4666691

Margaret C. Levenstein

University of Michigan at Ann Arbor - Survey Research Center ( email )

500 S. State Street
Ann Arbor, MI 48109
United States
734-615-9088 (Phone)
734-647-1186 (Fax)

HOME PAGE: http://www-personal.umich.edu/~maggiel

The Stephen M. Ross School of Business at the University of Michigan, Business Economics and Public Policy

Ann Arbor, MI 48109
United States
734-764-8336 (Phone)

Valerie Y. Suslow (Contact Author)

Johns Hopkins University - Carey Business School ( email )

100 International Drive
Baltimore, MD 21202
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
45
Abstract Views
282
PlumX Metrics