Richard Scheelings, Joshua Wright
Date Posted: 2005
Periods of profound innovation and technological change invariably result in short run winners and losers. The rise of big box retailers like Wal-Mart, as well as the existence of large supermarket chains, has led competition authorities to focus anew on the issue of 'buyer power.' Antitrust authorities in the United States have been investigating "slotting fees" and other retail practices, while UK and EU authorities have commenced a number of inquiries into the competitiveness of the supermarket grocery retail sector. Some in competition policy circles in the United States and Europe claim that there is something sufficiently special about market power on the buyer side of vertically-related industries as to warrant special antitrust scrutiny or a separate analytical framework altogether. In this paper we outline both the relevant applicable law in the US and Europe, as well as the economics of 'buyer power'. We conclude that while antitrust authorities must always be mindful of the facts and details of any potentially anticompetitive agreement, from an economic point of view, the case for treating 'buyer power' differently from any other form of market power is unpersuasive. We compare U.S. and E.U. antitrust law, focusing our analysis on the adequacy of legal treatment of buyer power in the retail sector, and particularly, with respect to supermarkets.