Hub-and-spoke cartel – how to assess horizontal collusion in disguise?

Abstract

The increased effectiveness of competition law enforcement has contributed to th appearance of an atypical type of cartel, which engages not only competitors, but also their common supplier (or retailer). The so called hub-and-spoke cartel consists in the exchange of strategic information between two or more horizontal competitors (spokes) via a common contractual partner active at a different level of the production/distribution chain (the hub), who often also contributes to stabilizing a cartel. Due to the existence of the vertical element of this indirect information exchange, the question arises whether it should be assessed in the same way as its direct equivalent, i.e. as a “by-object” restriction of competition, thus, not requiring an analysis of its actual effects. Although the EU institutions have not adjudicated a hub-and-spoke collusion case yet, the jurisprudence of the national courts may provide useful guidance on what the constituent elements of the hub-and-spoke collusion are and how to assess this practice under the EU competition law. The analysis of both national and EU case law allows to contend that the hub-and-spoke cartels should amount to de facto horizontal information exchange and be assessed in accordance with the “by-object” standard. However, the hub-and-spoke collusion may equally constitute a part of a normal negotiation process (e.g. bargaining) with trading partners, as well as give rise to several efficiency gains, which should be taken into account in examining the practice concerned under the EU competition law.