Our examination illustrates two points of intersection between exclusion and collusion. First, competitors may collude to exclude. For example, a price-fixing cartel may pursue exclusionary conduct because entry threatens cartel stability, and thus exclusion helps to protect the cartel’s ill-gotten gains. But such conduct is hardly limited to cartels. Rivals may engage in parallel, often interdependent exclusionary conduct without any provable agreement among them.
Second, though less frequently recognized, a group of competitors might instead trade exclusion for collusion. That is, the colluding competitors engage in exclusion for the benefit of a supplier or customer, rather than themselves. In exchange, the competitors receive assistance with their collusive project.
We identify and assess several doctrinal approaches to establishing antitrust liability for anticompetitive exclusionary coalitions. The approaches differ in the degree to which they reflect or omit important economic features of the coalitions. Some coalitions are challenged as the action of a single excluder, an approach that ignores the collective economic effect of a horizontal coalition. Others are litigated as horizontal conspiracies, an approach that unduly elevates the formal question of agreement over the economic substance of the coalition’s effects. We argue that for coalitions with a vertical element, a more appealing approach is to allege parallel vertical contracts under Section 1 of the Sherman Act and aggregate their collective foreclosure effect.
Continue reading the full text of this article and citations in PDF format.