Competition authorities generally differentiate vertical agreements - agreements between firms operating at different levels of the supply chain - from horizontal agreements - agreements between competitors active on the same relevant market. While vertical agreements can potentially increase consumer welfare by facilitating coordination through the value chain, horizontal agreements are generally a breach to antitrust laws.
Yet, an increasing number of arrangements appear as a mix of vertical and horizontal agreements: they involve competitors and at least one participant which operates at a different level of distribution. Those agreements are often labeled “hub-and-spoke” conspiracies. Indeed, the US antitrust law uses the analogy of a
…show more content…
The Origins of Hub-and-Spokes Conspiracies
At first sight, the existence of a hub-and-spoke conspiracy appears at odds with anticompetitive purposes: it seems unclear why an entity would want to increase the market power of upstream or downstream firms. This part first defines the different types of hub-and-spokes conspiracies, it then explains their reasons of existence and finally outlines five historical cases that contributed to the definition of hub-and-spoke conspiracies.
Hub-and-spoke conspiracies can be cases of upstream or downstream collusion. In the first type of hub-and-spoke conspiracy, there is one manufacturer/supplier acting as the hub and several distributors/retailers acting as the spokes. In this case, retailers endorse a common supplier with the role of setting prices, monitoring their implementation and punishing retailers who do not abide by it. A single supplier thus generally agrees on an identical RPM with many retailers.
In the second type of hub-and-spoke conspiracy, there is one retailer acting as the hub and many suppliers acting as the spokes.
N.B. In both cases, there may be intermediaries between the suppliers and retailers, such as manufacturers and
…show more content…
The failure of one of this aspects is enough to end a cartel. In a hub-and-spoke conspiracy, the spokes delegate these organizational functions to a third-party, the hub, located at a different part of the value chain. For example, a Resale Price Maintenance (RPM) imposed by the hub can replace a price fixing agreement between the spokes. The spokes consequently communicate and make decisions indirectly through a third party. The introduction of a vertical relationship into the conspiracy thus facilitate coordination.
However, hub-and-spoke conspiracies are hard to identify. Indeed, a firm can adopt several vertical restraints with trading partners, and yet it would not be a case hub-and-spoke. To prove the existence of a hub-and-spoke conspiracy, there must be evidence of what US antitrust law calls a “rim requirement”, i.e. proof of communication between the spokes. Without this proof, there is no horizontal agreement and the relationship would be considered as a set of parallel vertical relationships. Proving a hub-and-spoke conspiracy thus comes down to proving the existence of the rim that connects the
Standard Oil had a good relationship with the railroad industry in the late 19 and early 20th century. Standard oil was trying to gain control of the railroad companies so they could get the most out of their money. Their goal was to make max profit out of everything they were getting. They used vertical integration or the combination of one or two stages of production, that started as two separate companies. Standard oil did this by taking control of the railroads, so they didn’t have to pay for shipping cost, making them more money in the end.
The Culper Spy Ring The Culper Spy Rings was a spy network started by George Washington to get information about the British, during the Revolutionary War. The Patriots (colonists) were fighting against the British, in this war. The Patriots hoped to gain freedom from Britain, liberty, and equality by winning the war. Since the Patriots forces were only the colonists, they didn’t have a lot of weapons or people on their side, and the people they did have were not well trained to fight.
When analyzing a Section 1 Sherman Act violation under the rule of reason, the court will review “whether the restraint imposed is justified by legitimate business purposes and is no more restrictive than necessary.” The defendant will not be guilty of violating anti-trust laws if the defendant can prove that the restraint of trade had a legitimate purpose to further their business by using the least restrictive means to achieve
Above all, surveillance should not be taken without the knowledge of a citizen. Robert Mankoff, cartoon editor of The New Yorker, reports that the government has access to see everything citizens are doing, but they claim they do not have this privilege (Cartoon Surveillance). There is no need for the government to see the domestic actions of citizens, especially without their knowledge. ACLU claims people with no suspicion are under surveillance while they are doing nothing wrong. Citizens do not know they are being watched because there is no probable cause for them to be watched (NSA’s Surveillance).
The Conspirator written by James Solomon and directed by Robert Redford is the story of Mary Surratt’s trial and the legal system in 1865. Mary Surratt and seven men accused of conspiring with John Wilks Booth to kill President Lincoln was tried by a military tribunal instead of a jury of their peers. Four of the accused were convicted and hung and four were convicted of lesser crimes and sentenced to prison. Mary Surratt was the first female legally hung by the United States government. The government believed that Mary Surratt’s son was Booth’s right hand man
A friend of mine, Twyla Johnson, of Des Moines, Iowa needs your help. Twyla 's sister was murdered in 1975. No one has ever been held accountable for this murder. The detective on the case in 1975, now retired, has told Twyla the names of the persons believed to be guilty. He went to the prosecutor 2 times, but it was said there wasn 't enough evidence to convict.
A wheel conspiracy deals only with a ringleader, who serves as a central hub, and not with one another. A chain conspiracy means that the people involved follow in a sequence and deal with only the individual who comes before them. This case is a chain conspiracy, because there is no specific leader of the conspiracy. Even though it is Beth’s plan, each conspirator does not answer directly to her, but rather they follow in a sequence. Each person deals with the person before them.
Bias v. Advantage International Upon the completion of Len Bias’s collegiate basketball career at the University of Maryland, Bias on April 7, 1986, reached an agreement with Advantage International who consented to counsel and maintain his affairs. The Advantage representative who was assigned to his case was A. Lee Fentress. The Boston Celtics picked Bias on June 17, 1986, in the first round of the National Basketball Association draft. Then, two days later on the morning of June 19, 1986, unfortunately Bias died of a cocaine overdose.
I delivered my informative speech on the Culper Spy Ring extemporaneously and used six pages of speaker notes to help keep my speech on track. I also arrived to class early as usual in order to set up the PowerPoint before class started. Another student agreed to record my speech, which was about twelve minutes long. With this speech, I continued to keep my tone more conversational in order to better keep the attention of the audience.
Jews are special creatures who have inspired more conspiracy and hatred than every other group in humanity’s history. An allure that is both detestable but intoxicating in its ability to capture people’s imagination, this elusive, funny-looking race has a fascinating and comically tragic history (e.g., Holocaust), and contain an ensemble of the World’s most influential characters—Abraham, Jesus, Karl Marx, Einstein, and Steven Pinker. Characteristically neurotic and eccentric, power-hungry and ego-driven, the Jews have against all odds ruled the World, despite their small population and their near extinction. How have they accomplished this feat? Are any of the perennial conspiracies throughout history true?
The ‘Informant” is a comedy crime film that depicts the involvement of Mark Whitacre a vice president of at the Archer Daniels Midland (ADM) as a whistleblower in the scandal of Lysine price fixing. ADM is among the fortune 500 companies and its line of work is to produce lysine an addictive used in commercial livestock. The other products produced by the company include, ethanol, sweeteners and some other crops. Mr. Archer is driven by hunger for power and his actions make him earn a nine-year sentence to prison. To be able to handle our questions on the consequences faced By Archer and the top managers at the ADM Company we must have full understanding of what transpires before in the movie and what eventually lead to the consequences that
2.2 Industry Analysis - Porter’s 5 Forces Analysis Threat of Substitutes Bicycles and services from unknown manufacturers can provide huge substitution threats. Just as alarming for bicycle manufacturers is the internet: it is developing as an excellent medium for cheap marketing services. The price that consumer are willing to pay for a product is depends the quantity and the availability of substitute products. When a close substitute for a product is exist, industry profitability is suppressed because consumer will pick out if the price are high. Example consumer will compare the price of other bicycles with this bicycle in terms of quality and appearance, a customer can easily get another bicycle which is less difference but in more cheaper
Threat of Substitutes 4. Bargaining Power of Buyers 5. Power vested by Suppliers 1. Competitive Rivalry: According to Porter the competitiveness in any sector is significantly increased by the number of players operating in the field and their major competencies.
Pharmaceutical products require various types of organic chemical. There are a number of chemical suppliers present in the market. Instead of buying chemicals at the high cost, pharma companies can switch from one company to other. For specific APIs where the sourcing of raw materials is difficult, suppliers have a higher bargaining power but since most raw materials are easily available and suppliers are numerous, where one can easily replace the other, their bargaining power is low. " Bargaining power of buyer:
Secondly, Porter’s Five Forces Model is used to analyse the level of rivalry in the market, the attractiveness for potential new entrants, the power of suppliers, the power of buyers and the threat of substitution. This will allow us to see a holistic view of the industry in the market environment. Thirdly, the PESTLE framework is used to analyse the factors within the macro environment that are influencing