Buyer Power Today

A book chapter in "Albert Foer Liber Amicorum" in honor of Bert Foer, the founder of the American Antitrust Institute

17 Pages Posted: 18 Jun 2019 Last revised: 27 Oct 2020

Date Written: June 7, 2019

Abstract

Buyer power has long been a neglected issue in antitrust law. Thanks to Bert Foer and others, however, that has changed. In the last two decades, studies have shown that monopsony power is a widespread problem, particularly in labor markets, and challenges to anticompetitive conduct by buyers have increased sharply. Monopsony power is now on the antitrust agenda. At the same time, interest in the other form of buyer power, countervailing power, has also increased. In two high-profile merger cases, Anthem/Cigna and Aetna/Humana, the parties claimed they could save billions of dollars of medical costs by reducing their payments to hospitals, doctors, and other providers. These cases might have marked the first time that countervailing power had justified an otherwise anticompetitive merger. But the parties refused to assert that they would use their post-merger purchasing power to extract bigger discounts from providers. Instead, they would take a variety of less muscular steps. These steps were fraught with practical difficulties, however, and the savings claims were rejected. In the end, the procompetitive benefits of countervailing power were never determined.

Keywords: antitrust, buyer power, monopsony, countervailing power, mergers, efficiency defenses

Suggested Citation

Kirkwood, John B., Buyer Power Today (June 7, 2019). A book chapter in "Albert Foer Liber Amicorum" in honor of Bert Foer, the founder of the American Antitrust Institute, Available at SSRN: https://ssrn.com/abstract=3402018

John B. Kirkwood (Contact Author)

Seattle University School of Law ( email )

901 12th Avenue, Sullivan Hall
P.O. Box 222000
Seattle, WA n/a 98122-1090
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
59
Abstract Views
345
rank
431,093
PlumX Metrics