Hub-and-Spoke Collusion or Vertical Exclusion? Identifying the Rim in Hub-and-Spoke Conspiracies
Hub-and-spoke conspiracies raise complex economic and legal questions, as these arrangements involve a vertically related “hub” that can facilitate coordination among competing “spokes.” Courts and practitioners face added challenges in determining whether exclusion can be achieved through conventional vertical restraints or through a collusive agreement facilitated by a vertically related firm.
Dr. Rosa Abrantes-Metz, Dr. Pedro Erdei-Gonzaga, Laura Ildefonso, and Dr. Albert Metz offer an economic framework to help distinguish exclusionary hub-and-spoke conspiracies from conventional vertical agreements. Both can lead to similar market outcomes, such as the foreclosure of a competitor, but the underlying incentives, coordination mechanisms, and competitive effects may differ significantly when horizontal agreement among spokes is present.
The authors examine the economic logic behind these arrangements, explore how exclusionary boycotts operate in practice, and highlight the role economic evidence can play in identifying coordinated conduct.
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