This presentation by Okeoghene Odudu, Senior lecturer, Oxford University, was made during the discussion “Hub-and-spoke arrangements” held at the 132nd meeting of the OECD Competition Committee on 4 December 2019. More papers and presentations on the topic can be found at oe.cd/hsa.

1. Hub-and-spoke arrangements
in EU competition law
Okeoghene Odudu
Faculty of Law, University of Cambridge
December 2019: OECD roundtable

2. Legal basis
To establish an infringement of Article 101 it is
necessary to show that there is:
1.an agreement or concerted practice
2.with the object or effect or restricting
competition (harm)
3.that is not outweighed by benefits
identified under Article 101(3) TFEU

3. Legal basis
The legal basis for dealing with information
exchange is developed in the horizontal context.
Here two propositions are established:
1. There is an obligation of independence
2.Independence is not compromised by taking
account information about a competitor, as
long as that information is obtained in an
authorised manner

4. First proposition
‘the concept inherent in the provisions of the
Treaty relating to competition [requires] that
each economic operator must determine
independently the policy which it intends to
adopt on the common market including the
choice of persons and undertakings to which
he makes offers or sells.’

5. First proposition
‘any direct or indirect contact between such
operators, the object or effect whereof is
either to influence the conduct on the market
of an actual or potential competitor or to
disclose to such a competitor the course of
conduct which they themselves have decided
to adopt or contemplate adopting on the
market.’

6. Second proposition
“it is correct to say that this requirement of
independence does not deprive economic
operators of the right to adapt themselves
intelligently to the existing and anticipated conduct
of their competitors”

7. A C
A discloses
information to C
C does not reject
that information
Anic presumption:
C cannot fail to take
the information into
account.
Intention is implicit
because it is not
normal to disclose
strategic
information to a
competitor.

8. A C
B
Manufacturer
(upstream)
Retail
(downstream)

9. A C
B
The Problem
A discloses
information to C
A discloses
information to B
Intention/harm is implicit from
the type of information
Intention/harm not
implicit from the
type of information

10. A C
B
The Problem
A discloses
information to C
Intention/harm is implicit from
the type of information
right to adapt
themselves
intelligently
C does not reject
that information

11. “if (i) retailer A discloses to supplier B its future pricing
intentions in circumstances where A may be taken to intend
that B will make use o f that information to influence market
conditions by passing that information to other retailers (of
whom C is or may be one), (ii) B does, in fact, pass that
information to C in circumstances where C may be taken to
know the circumstances in which the information was
disclosed by A to B and (iii) C does, in fact, use the
information in determining its own future pricing intentions,
then A, B and C are all to be regarded as parties to a
concerted practice having as its object the restriction
or distortion of competition .”
The Approach Developed
in The United Kingdom

12. Court of Appeal
‘if (i) retailer A discloses to supplier B its future pricing
intentions in circumstances where A may be taken to
intend that B will make use of that information to
influence market conditions by passing that information
to other retailers (of whom C is or may be one), (ii) B
does, in fact, pass that information to C in
circumstances where C may be taken to know the
circumstances in which the information was disclosed by
A to B and (iii) C does, in fact, use the information
in determining its own future pricing intentions.’

13. intend
Phase I Phase II
A C
B
use the information
know

14. intend
Information is not necessary
A C
B
know
Satisfying the standard

15. intend
Information is necessary
A C
B
know
Satisfying the standard

16. Case Closed?
dairy
tobacco
branded goods

17. Leniency incentive
• An important question is whether there is
an incentive to seek leniency in a pure
hub and spoke.
• Since A and C are “blind”, the whole story
is not clear to each participant in the
conduct

18. RPM with horizontal
elements
A C
B Vertical agreement +
policing/monitoring
Experience is that it
is possible to infer
the former from the
latter

19. A C
B
Horizontal agreement + policing/monitoring
Experience is that it
is not possible to
infer the former
from the latter