Hub-and-spoke cartel – how to assess horizontal collusion in disguise?

Iga Małobędzka

doi:10.7206/kp.2080-1084.110

Abstract

Hub-and-spoke cartel – how to assess horizontal collusion in disguise?

Highlights

The European Commission has always attached high priority to the detection of cartels.2 Article 101(1) TFEU3, which together with Article 102 TFEU constitutes the core of the EU competition law, explicitly prohibits agreements, decisions by associations of undertakings and concerted practices that may affect trade between Member States and have as their object or effect the prevention, restriction or distortion of competition within the internal market
The so called hub-and-spoke cartel consists in the exchange of strategic information between two or more horizontal compe titors via a common contractual partner active at a different level of the production/distribution chain, who often contributes to stabilizing a cartel
Due to the existence of the vertical element of this indirect information exchange, the question arises whether it should be assessed in the same way as its direct equivalent, i.e. as a “by-object” restriction of competition, not requiring an analysis of its actual effects

Summary

Introduction

The European Commission has always attached high priority to the detection of cartels. Article 101(1) TFEU3, which together with Article 102 TFEU constitutes the core of the EU competition law, explicitly prohibits agreements, decisions by associations of undertakings and concerted practices that may affect trade between Member States and have as their object or effect the prevention, restriction or distortion of competition within the internal market. 46 In case JJB Sports plc vs Office of Fair Trading, the CAT held that an anti-competitive concerted practice exists „if one retailer ‘A’ privately discloses to a supplier ‘B’ its future pricing intentions in circumstances where it is reasonably foreseeable that B might make use of that information to influence market conditions, and B passes that pricing information on to a competing retailer ‘C’”. If the requirements of the above mentioned test are fulfilled and the practice has a horizontal effect, it should amount to a de facto horizontal information exchange.61 It would seem justified for the EC and EU courts to apply the same standard as in the case of direct information exchange, i.e. assess the hub-and-spoke collusion as a restriction by object. There are several rationales for B to facilitate the cartel. the supplier may be content with the effective downstream collusion, which could be more profitable for him than price wars and fierce competition, as it may lead to higher profits for him

65 See for example

Conclusion