CRA Insights

Effects Analysis in Hub and Spoke Cartels

October 26, 2010

Email communication which may appear to be consistent with hub and spoke cartel behaviour may simply be unsanctioned and inaccurate speculation by relatively junior staff members. This raises the issue as to how much weight should be placed on economic effects when investigating hub and spoke cartels. Clearly, effects are only one consideration; for example, an attempted but unsuccessful hub and spoke cartel endorsed by senior managers should not be treated as sympathetically by competition authorities as idle chatter among junior staff, even if neither had a detrimental impact on consumers. However, the analysis of economic effects can play a significant role in both identifying and quantifying the nature of hub and spoke activity. This memo outlines how this effects analysis was applied in a recent investigation.

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