Buyer power and supplier platforms merger: What role for competition authorities?

Stéphane Hautbourg

There is a growing interest in questions of purchasing power. Purchasing power is the ability of a company to demand preferential purchasing terms. The strengthening of a firm’s purchasing power can have significant pro-competitive effects (lower supply prices passed on to consumers, increased incentives for suppliers to invest and innovate, countervailing power likely to balance the market power of sellers, etc.) but also significant anti-competitive effects, which should not be neglected.

Buying power is not sufficient to characterise a restriction of competition. The effects of structural mergers and horizontal agreements must be assessed in their entirety.

The main competition concerns examined so far relate to exclusionary effects and "communicating vessels". Exclusionary effects are likely to occur if competing buyers are not able to replicate price reductions in the downstream market. As for ’communicating vessels’ effects, they may result from an increase in competitors’ costs if access to the most efficient suppliers is reduced or if competitors decide to compensate for price reductions granted to the buyer with such buying power.