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This chapter describes the harms to competition that can result from the abuse of buyer power. It starts with an analysis of harms resulting from exploitation that include depressed prices, discrimination among producers, uncompensated shifting of risks and costs to producers and the potential that the harms will flow upstream to suppliers of the supplier. It then describes the exclusionary harms that buyer power can cause to competitors of the buyer both as buyers and in any downstream markets where they compete. These practices include exclusive contracts, inducing refusals to deal by producers, most favored nation type clauses in buying contracts and predatory buying practices that increase the cost of inputs to competitors of the buyer. The final part of the chapter argues that abuse of buyer power generally and monopsony in particular is more harmful to the competitive process than is abuse of monopoly.

This chapter identifies, describes and evaluates alternative ways to limit or regulate the abuse of unilateral buyer power. The first category is that of more general regulation of conduct which can specifically address strategic conduct by dominant buyers, provide overall regulation of market participants regardless of power, set floors or other constraints on transactions, or provide sponsorship for alternative outlets for producers. The second category involves creating off-setting power in producers either by authorizing producer cartels or permitting integration, vertical or horizontal, by producers. Finally, public authorities can create alternative markets for producers. Each of these strategies has some capacity to limit abusive buyer conduct, but each is also fraught with difficulties both in defining standards and in achieving the goal of constraining buyer abuses. The implication, consistent with Chapter 5, is that remedying buyer power problems once the power exists is likely to have only limited effectiveness.