The Regulation Of Hub-and-spoke Cartels

In the classical theory,monopoly agreements are divided into horizontal agreements and vertical agreements and,respectively,subject to per se illegality and rule of reason(or,object approach and subject approach).A hub-and-spoke cartel is a variant thereof,which is a cartel consisting of a hub and several spokes,while in the meantime the hub and the spokes locate in different commercialization levels of an industry.A hub-and-spoke cartel,therefore,enjoys a form of a vertical restraint but an effect similar to that of a horizontal restraint.Subject to such a classical theory,one main issue of the regulation of hub-and-spoke cartels refers to the competition analysis to be resorted to: administrative and judicial practices stand with per se illegal or object approach,while the mainstream economics and some law scholars stand with rule of reason or effect approach,calling for the consideration of specific industry context and economical environments.Another main issue is the actus reus(or Tatbestand)of such cartels,of which the keynote is the confirmation of indirect conspiracies by spokes through the common hub.Chapter I hereof analyzes the relevant basic concept and structures of the cartel at issue,and thereafter,discusses the significant characteristics of hub-and-spoke cartels in connection with its simplified history in United States,and the four imminent problems of nature,analysis,actus reus and localization caused by these characteristics.Chapter II starts with the categorization of monopolistic conducts,analyzes the dilemma facing the classical dichotomy of per se illegality and rule of reason,points out that the complex hub-and-spoke cartel models require a more valid competition analysis,and based on the work of Justice Stevens,tries to give a renovated competition analysis genial in virtue of a systemized presumption mechanism.Chapter III deals with the problems of nature and analysis,based on the confirmation of horizontal restraint as the nature of hub-andspoke cartels,taking account of inter-disciplinary persuasive opinions,differentiating the strong form and weak form of hub-and-spoke structures,and with the use of competition analysis genial asserting for respective applications of rebuttable and non-rebuttable per se illegality.Chapter IV considers the typical practices in other jurisdictions and draws the step-up two-stage demonstration and the “plus factor” demonstration,identifying the essentiality of economy evidence,promotion evidence and substantial transactions concerning the actus reus of hub-and-spoke cartels.Chapter V takes into account the route of localization,including the independent categorization of the cartel at issue,the existing cases,and the incorporation into the exisiting antitrust regime,under Chinese law.Other than centering the actus reus upon the conspiracies among hub and spokes,the hub-and-spoke regulation theory aims at subjecting such horizontal coordination with a form of vertical restraints thorough indirect conspiracies to the stricter competition analysis against horizontal restraints.Equally important,after account be taken of the competition effect of vertical restraints on the conducts at issue,it seems necessary to distinguish between the strong form structure similar as horizontal restraints and the weak form structure standing between horizontal and vertical restraints based on the allocation of bargaining power and factors with similar effect,and apply non-rebuttable and rebuttable per se illegality in the competition analysis genial accordingly.Given the flexible and comprehensive standard theory hereof regarding hub-and-spoke regulation,it would be desirable to make the mutatis mutandis mechanism design while keeping the hard-core part of competition analysis and actus reus theory when it comes to the localization.