The other invisible hand of markets: The market power of social networks, seller and buyer power and competition law

This dissertation discusses the role of competition law in dealing with problems of seller and buyer power. It is argued that social and business networks and groups may constitute a new source of seller and buyer power and hereby competition law and policy should regulate this network power. Following an interdisciplinary perspective, this argument is elaborated as follows.;Departing from these views, it is claimed that abusive practices associated with buyer and seller power derive not only from overt strategic behaviour under conditions of market share concentration but also from group connections or membership and networks. Individual sellers and buyers may elicit their market power from their embeddedness in business networks and groups. These latter may facilitate sellers and buyers engaging in exclusion, exploitation and anticompetitive coordination to the detriment of unconnected sellers and buyers.;This harms downstream and upstream as well as short and long-term competition. Moreover, as networks and groups are socially constructed in terms of race, class, gender and ethnic differences and sustained by elites, buyer and seller power associated with group connections also reflects such differences and such elite control. A group or network of sellers and buyers may exclude, exploit and coordinate their actions against sellers and buyers associated with racial minorities, powerless ethnic groups, low-income groups and women. This further re-structures the market power of sellers and buyers, distorts market competition, misallocates business opportunities and widens social inequalities. Despite these socio-economic findings, modern competition laws do not fully capture these market power problems associated with social networks and groups. The review of selected current competition legislations of four countries namely Canada, Germany, Japan and South Africa indicates that there is an important regulatory gap in relation to seller and buyer power embedded in networks and groups.;To respond to this regulatory gap, it is necessary to incorporate the market power of social networks and groups into competition law. (Abstract shortened by UMI.);Neoclassical and institutional law and economics paradigms of seller and buyer power have largely overlooked network and group power. While sensitive to the broader institutional environment of market power and market competition, progressive institutional analyses drawing on American old institutional economics and German Ordoliberalism have not developed a clear account of the power of social networks and groups and the effects of these latter on seller and buyer power.