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Analyzing Incentives and Liability in “Hub-and-Spoke” Conspiracies

Craig Falls and Celeste Saravia, Distribution and Franchising Committee Newsletter: ABA Section of Antitrust Law, April 2015

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This article attempts to bring some order to the analysis of hub-and-spoke conspiracies by analyzing the incentives of the participants and explaining how those incentives should inform the analysis of liability. Because we find that the incentives change dramatically from one type of hub-and-spoke conspiracy to the next, we first propose a taxonomy that divides hub-and-spoke conspiracies into three classes based on whether the harm to competition occurs at the level of the vertical participant, at the level of the horizontal participants, or at both levels, and we provide representative examples of each class. We then proceed to explain the incentives in each class of hub-and-spoke conspiracy and finish by discussing how these incentives should impact the analysis of liability.

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