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Steiner, Robert L. --- "Cooperation, Competition and Collusion Among Firms at Successive Stages" [2002] ELECD 100; in Cucinotta, Antonio; Pardolesi, Roberto; Van den Bergh, J. Roger (eds), "Post-Chicago Developments in Antitrust Law" (Edward Elgar Publishing, 2002)

Book Title: Post-Chicago Developments in Antitrust Law

Editor(s): Cucinotta, Antonio; Pardolesi, Roberto; Van den Bergh, J. Roger

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781843760016

Section: Chapter 14

Section Title: Cooperation, Competition and Collusion Among Firms at Successive Stages

Author(s): Steiner, Robert L.

Number of pages: 21

Extract:

14. Cooperation, competition and
collusion among firms at successive
stages
Robert L. Steiner
This chapter identifies and examines three relationships among firms at
successive stages, focusing on those between consumer goods manufactur-
ers and their retailers. The relationships are cooperative, competitive and
collusive ­ the three Cs. Typically, a manufacturer­retailer relationship will
contain at least the first two of these. I examine each of the three relation-
ships as prologue to the last section of the chapter, which deals with cate-
gory management. This is a fascinating, rapidly expanding format that has
swept across the consumer goods economy. Category management poten-
tially contains all of the three Cs and deserves the attention of competition
authorities.


COOPERATIVE
It is hardly necessary to enumerate the ways in which firms at successive
stages can cooperate to their mutual benefit and that of society. The Chicago
literature, especially, provides an efficiency explanation for virtually all
instances of voluntarily adopted vertical restraints. The following is a good
statement of this position by two economists at the Department of Justice's
Antitrust Division (Schwartz and Eisenstadt, 1982, p. 4):

The fact that firms in a vertical relationship engage in complementary rather than
competing activities strongly suggests that the motivation for employing vertical
restraints is radically different from that for horizontal restraints. Competitors natu-
rally will try to restrict each other's output either by forming a collusive combina-
tion or by driving one another out. Consequently, antitrust is rightly suspicious of
any horizontal `restraint of trade'. ...