Hub-and-spoke arrangements involve coordination between competitors (spokes) through a common intermediary (hub), such as a supplier or retailer. Information exchange between the competitors is indirect through the hub. This raises antitrust issues if legitimate conversations between the hub and spokes are used to facilitate anti-competitive coordination between horizontal competitors. Enforcement authorities must determine if inherently legal vertical discussions have been used for illegal horizontal collusion and distinguish between legal vertical agreements and illegal hub-and-spoke arrangements.

1. HUB-AND-SPOKE
ARRANGEMENTS
Presentation by the Secretariat to the
Competition Committee
4 December 2019

2. A cartel between competitors on one
market side (spokes) that is co-ordinated
through a vertically related, common
intermediary (hub), usually a supplier or a
retailer.
The information exchange between the competitors is
mostly or solely indirect.
Definition
2

3. Supplier or retailer induced
3
Supplier
Retailer
5
Retailer
4
Retailer
3
Retailer
2
Retailer
1
Retailer
Supplier
5
Supplier
4
Supplier
3
Supplier
2
Supplier
1
Direct information exchange between retailer(s) and supplier(s) that
would be perfectly legal in the vertical relationship may become
problematic, when this information is passed on to horizontal
competitors by the common hub.

4. What are the incentives for the hub to enable
or facilitate a cartel on the other market side?
Economic dependency, passing on of input cost
increases, implementation of a cartel agreement,
foreclosure of competitors …
Enabling market structures?
Market power on at least one market side?
(No) “typical” product markets?
Movie pricing, vodka, dairy products, toys, coffee,
sweets, paint & varnishes, drugstore items, e-books,
…
Economic questions
4

5.  How to determine if inherently legitimate
conversations between suppliers and retailers are
used for anti-competitive purposes?
 How to distinguish between hub-and-spoke and
parallel vertical agreements/exchanges?
 Liability of the spokes
 For passing on/receiving of information they did not ask for?
 Liability of the hub
 Degree of awareness, intent, motive?
 Not a horizontal competitor – restriction of competition?
 RPM as an implementation device – or vertically
imposed – or bilaterally agreed?
Legal questions
5

6. Algorithms
Parallel use – joint use
Monitoring device
Co-ordination device
Platforms
Across platform parity agreements as commitment
device (US e-books case)
Direct co-ordination of sellers’ retail prices by platform
(through algorithms)
Digital challenges
6

7. Proof of exchange of information over
at least two instances can be difficult.
Proof of intent/state of mind – rarely
documented.
Scope of proceedings can easily
become very large – prioritization.
Enforcement challenges
7