Joint Purchasing Agreements Antitrust

Finally, downstream customers may be able to argue that the agreement controlled production and thus increased prices. Of course, there is also a risk that joint purchase agreements will indirectly allow competitors to agree on their selling prices or production levels. #winstonantitrust guidelines of the DOJ and the Federal Trade Commission (in the health field) states that joint purchases do not raise cartel problems, unless AOA members account for “significantly less than 35% of the turnover of optometric products.” Although costs exceeded the 20% threshold, the DOJ found that joint purchases outside the safe zone are not necessarily a concern. It introduced additional safeguards that eliminated the risk of incorrect price coordination “for the most part, if not entirely”: 1. Members are not required to buy through AOA; 2. A third party will negotiate prices with suppliers; and (3) the communication on prices between AOA and each member is treated confidentially for each participant. While legislation on cartels and abuse of dominance limits some common behaviour on the part of competitors, DOJ`s letter reminds that competitors can cooperate to benefit consumers. Companies that are properly structured and working with competitors can result in improved volume discounts, lower transaction costs, lower prices, new or improved products or services, interoperable products, or better access to otherwise unavailable products or services. Sometimes a company may wonder if there is anything the industry as a whole can do to cope with the rising cost of components or materials.

I hope that most of the company`s employees understand that discussions with competitors in the same sector about product prices can lead to significant risks in terms of cartels and abuse of dominance. The same is naturally true in the context of an inter-professional forum or an inter-professional organisation. And it is true that the sector is under a lot of pressure on the market. However, fewer company employees recognize that talking about equipment costs and other inputs with competitors can also raise serious concerns about cartels and abuse of dominance. A company may consider partnering with a competitor as part of the purchase to try to put more pressure on suppliers to reduce the costs of components and materials. However, companies need to realize that these types of partnerships – or joint purchase agreements – are potentially useful, but they are also exposed to cartel and abuse risks. The Department of Justice Antitrust Division (DOJ) issued a business evaluation letter in which it stated its intention not to challenge the American Optometric Association`s (AOA) plan to extend the group`s purchases to optometric products such as corrective lenses, eyeglass frames and contact lenses. A company or other organization may file a proposed complaint and obtain a statement as to the DOJ`s intention to challenge the measure under antitrust law. The AOA is a professional association of about 27,000 doctors independent of optometry and other players in the sector. While some physicians are competing to purchase optometric products, DOJ has concluded that the AOA plan is unlikely to harm consumers. This case recalls that cartel and abuse legislation allows for certain competing cooperations, such as joint purchase agreements.

B, which benefit consumers.

Comments are closed.