New Kids on the Block: Is Retailers’ Buyer Power a Factor Conducive to Collusion?

Abstract

By the 2008 Pricing of Pasta decision the Italian Competition Authority (ICA) condemned 26 pasta makers and two industry associations for carrying out price-fixing practices in the market for durum semolina pasta. In order to establish the cartel, the ICA relied on economic evidence indicating that the pasta producers had an incentive to collude because of the retailers’ buyer power. This was rather a controversial finding. Firstly, the retailers’ buyer power have been generally considered as a factor which is not conducive to collusion. Secondly, there were asymmetries between cartelists, as some of them were branded producers whereas the others were small undertakings or private labels. Thus the branded suppliers had a relevant seller power, and for them it was more rationale to opt for an aggressive pricing policy instead of colluding with their weaker competitors.