Hub and Spoke Cartels vs. RPM: Differences, Interactions and the Concurrence of Wills’ Theory of Harm

Abstract

Wholesale-retail hub and spoke cartels usually combine a horizontal collusive behaviour between competitors and the involvement of at least one hub, who operates at a different level of the supply chain and facilitates the collusion, and some forms of vertical restraints, typically RPM or, in the context of e-commerce, broad RPMFN or even pricing algorithms. There are different economic theories to explain why the hub would accept the risk of facilitating or even promoting the collusion, and the economic literature has already shown that the referred vertical restraints can have horizontal effects which are very similar to a horizontal collusion, resulting in a difficulty for competition authorities to differentiate one conduct from the other. The ultimate scope of this dissertation is to identify the differences and interactions between RPM and hub and spoke cartels and, by analysing the current international enforcement activities against hub and spoke cartels, this dissertation proposes a single effective theory of harm for competition authorities to differentiate a hub and spoke cartel from the unilateral vertical anti-competitive conduct.