Supply Chains and Antitrust Governance

Antitrust regulations are meant to promote fair competition in the market, but balancing administrative and legal costs with enforcement can be difficult when multilayered supply chains involved. The canonical example of this challenge is landmark Illinois Brick ruling, which limits antitrust damages only direct purchasers a product; for instance, consumers file claims against colluding retailers not manufacturers—only manufacturers. This controversial ruling was reduce costs, it clearly lead missed opportunities. In paper, we demonstrate how interacts contracts adopted chain, show that otherwise equivalent chain arrangements have markedly different effects. particular, find wholesale price, minimum order quantity, revenue sharing, quantity discount take action manufacturers event collusive behavior. However, price plus fixed fee contract structure (also known as two-part tariff or slotting contract) facilitates collusion among compensated by filing litigation. We further more likely under high demand uncertainty at retail level less manufacturer level. Our paper helps public enforcers identify market conditions conducive violations. accepted Vishal Gaur, operations management.