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Competition Policy and the Control of Buyer Power

A Global Issue

Peter C. Carstensen

This book provides a comprehensive overview of the economic and competition policy issues that buyer power creates. Drawing on economic analysis and cases from around the world, it explains why conventional seller side standards and analyses do not provide an adequate framework for responding to the problems that buyer power can create. Based on evidence that abuse of buyer power is a serious problem for the competitive process, the book evaluates the potential for competition law to deal directly with the problems of abuse either through conventional competition law or special rules aimed at abusive conduct. The author also examines controls over buying groups and mergers as potentially more useful responses to risks created by undue buyer power.
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Chapter 6: Market regulation and other strategies to remedy abuse of buyer power

A Global Issue

Peter C. Carstensen

Extract

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.

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