Buying Power of Multiproduct Retailers 1998
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Buying Power of Multiproduct Retailers 1998 The OECD Competition Committee debated buying power of multiproduct retailers in October 1998. This document includes an executive summary, an analytical note by Mr. Gary Hewitt for the OECD and submissions from Argentina, Australia, Canada, the Czech Republic, Denmark, the European Commission, Finland, France, Germany, Italy, Japan, Korea, Mexico, Portugal, Spain, Sweden, the United Kingdom, the United States and BIAC, as well as an aide-memoire of the discussion. Many OECD countries’ competition agencies have been under pressure to take action against the exercise of buyer power by large multiproduct retailers. In several countries, such pressure has been accompanied by the adoption of legal provisions designed to counter abuses of "economic dependence" or to strengthen prohibitions attaching to price discrimination and loss leading. Although there may be valid efficiency justifications for prohibiting the exercise of buyer power by multiproduct retailers, there are also significant risks in doing so. Ill-advised enforcement could amount to protecting inefficient distributors at the expense of consumers. This kind of buyer power, which is extensively discussed in the analytical note, is quite different from classic monopsony power to push prices below competitive levels by reducing purchases. Instead, the focus here is on what might more accurately be described as negotiating power, particularly in situations where upstream suppliers have market power. Profit maximising distributors would try to reduce their suppliers’ rents. Where distribution is competitive, multiproduct retailers would use negotiating power to reduce those rents and pass them on to consumers. As long as distribution is sufficiently competitive, exercise of this kind of multiproduct retailer “buyer power” will tend to benefit consumers. Resale below Cost (2005) Predatory Foreclosure (2005) Predatory Pricing (1999) Resale Price Maintenance (1997) Competition Policy and Vertical Restraints – Franchising Agreements (1994) Unclassified DAFFE/CLP(99)21 Organisation de Coopération et de Développement Economiques OLIS : 16-Jul-1999 Organisation for Economic Co-operation and Development Dist. : 21-Jul-1999 __________________________________________________________________________________________ English text only DIRECTORATE FOR FINANCIAL, FISCAL AND ENTERPRISE AFFAIRS Unclassified DAFFE/CLP(99)21 COMMITTEE ON COMPETITION LAW AND POLICY BUYING POWER OF MULTIPRODUCT RETAILERS English text only 80101 Document complet disponible sur OLIS dans son format d'origine Complete document available on OLIS in its original format DAFFE/CLP(99)21 FOREWORD This document comprises proceedings in the original languages of a Roundtable on Buying Power of Multiproduct Retailers which was held by the Committee on Competition Law and Policy in October 1998. This compilation which is one of several published in a series entitled “Competition Policy Roundtables” is issued to bring information on this topic to the attention of a wider audience. PRÉFACE Ce document rassemble la documentation, dans la langue d’origine dans laquelle elle a été soumise, relative à une table ronde sur la puissance d'achat de la distribution multiproduits. Cette table ronde s’est tenue en octobre 1998 dans le cadre de la réunion du Comité du droit et de la politique de la concurrence. Cette compilation qui fait partie de la série intitulée “Les tables rondes sur la politique de la concurrence” est diffusée pour porter à la connaissance d’un large public les éléments d’information qui ont été réunis à cette occasion. Visit our Internet Site -- Consultez notre site Internet http://www.oecd.org/daf/clp 2 DAFFE/CLP(99)21 OTHER TITLES SERIES ROUNDTABLES ON COMPETITION POLICY 1. Competition Policy and Environment (Roundtable in May 1995, published in 1996) OCDE/GD(96)22 2. Failing Firm Defence (Roundtable in May 1995, published in 1996) OCDE/GD(96)23 3. Competition Policy and Film Distribution (Roundtable in November 1995, published in 1996) OCDE/GD(96)60 4. Competition Policy and Efficiency Claims in Horizontal Agreements (Roundtable in November 1995, published in 1996) OCDE/GD(96)65 5. The Essential Facilities Concept (Roundtable in February 1996, published in 1996) OCDE/GD(96)113 6. Competition in Telecommunications (Roundtable in November 1995, published in 1996) OCDE/GD(96)114 7. The Reform of International Satellite Organisations (Roundtable in November 1995, published in 1996) OCDE/GD(96)123 8. Abuse of Dominance and Monopolisation (Roundtable in February 1996, published in 1996) OCDE/GD(96)131 9. Application of Competition Policy to High Tech Markets (Roundtable in April 1996, published in 1997) OCDE/GD(97)44 10. General Cartel Bans: Criteria for Exemption for Small and Medium-sized Enterprises (Roundtable in April 1996, published in 1997) OCDE/GD(97)53 11. Competition Issues related to Sports (Roundtable in October 1996, published in 1997) OCDE/GD(97)128 12. Application of Competition Policy to the Electricity Sector OCDE/GD(97)132 (Roundtable in October 1996, published in 1997) 13. Judicial Enforcement of Competition Law OCDE/GD(97)200 (Roundtable in October 1996, published in 1997) 14. Resale Price Maintenance (Roundtable in February 1997, published in 1997) OCDE/GD(97)229 3 DAFFE/CLP(99)21 15. Railways: Structure, Regulation and Competition Policy (Roundtable in October 1997, published in 1998) DAFFE/CLP(98)1 16. Competition Policy and International Airport Services DAFFE/CLP(98)3 17. Enhancing the Role of Competition in the Regulation of Banks DAFFE/CLP(98)16 18. Competition Policy and Intellectual Property Rights DAFFE/CLP(98)18 19. Competition and Related Regulation Issues in the Insurance Industry DAFFE/CLP(98)20 20. Competition Policy and Procurement Markets DAFFE/CLP(99)3 21. Regulation and Competition Issues in Broadcasting in the Light of Convergence DAFFE/CLP(99)1 22. Relationship between Regulators and Competition Authorities DAFFE/CLP(99)8 4 DAFFE/CLP(99)21 TABLE OF CONTENTS EXECUTIVE SUMMARY ..................................................................................................................... 7 SYNTHÈSE……................................................................................................................................... 11 BACKGROUND NOTE ....................................................................................................................... 15 NOTE DE RÉFÉRENCE ...................................................................................................................... 69 SECRETARIAT SUGGESTED ISSUES FOR DELEGATES CONTRIBUTIONS.......................... 131 QUESTIONS SUGGÉRÉES POUR LES CONTRIBUTIONS DES DÉLÉGUÉS ............................ 133 NATIONAL CONTRIBUTIONS Australia ............................................................................................................................... 135 Canada ................................................................................................................................. 149 Czech Republic .................................................................................................................... 153 Denmark............................................................................................................................... 157 Finland ................................................................................................................................. 161 France ................................................................................................................................. 165 Germany............................................................................................................................... 171 Italy…… .............................................................................................................................. 183 Japan…................................................................................................................................. 189 Korea…................................................................................................................................ 195 Mexico….............................................................................................................................. 201 Portugal… ............................................................................................................................ 203 Spain…................................................................................................................................. 207 Sweden… ............................................................................................................................. 211 United Kingdom…............................................................................................................... 217 United States… .................................................................................................................... 225 Commission européenne…. ................................................................................................. 239 OTHERS Argentina.............................................................................................................................. 247 BIAC…. ............................................................................................................................... 255 Contribution from the US Federal Trade Commission FTC Toys "R" US Decision Press Release. ........................................................................