Hub-and-spoke Cases in the Portuguese Grocery Sector

Resale price maintenance (“RPM”) restrictions may play an instrumental role in implementing collusive agreements downstream, in a hub-and-spoke arrangement. This is highlighted in two recent decisions by the Portuguese Competition Authority (“AdC”) on two hub-and-spoke arrangements involving large grocery stores and beverage suppliers. In these cases, the AdC opted to pursue hub-and-spoke cases rather than pure RPM cases, as that would fail to capture the actual conduct of all firms involved, as well as the seriousness of the cartels fostered by the RPM restrictions. In particular, the decision to pursue these hub-and-spoke took into account the bargaining environment between each supplier and the retailers to explain how they had aligned incentives. When retailers hold significant buyer power over suppliers, they tend to put a downward pressure on supplier prices, so suppliers gain incentives to soften competition downstream in order to reduce that pressure. We provide some of the evidence used in these decisions and identify the key elements enforcers should consider when investigating potential hub-and-spoke arrangements.

By Ana Sofia Rodrigues, Catarina Tourais, Margarida Robalo Cordeiro, Mariana Dias, Marta Rocha & Rafael Longo¹

I. INTRODUCTION

Hub-and-spoke arrangements have attracted attention from academics and antitrust authorities. These are cartels coordinated through indirect exchanges of information between suppliers and retailers and raise