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72 Antitrust L.J. 563 (2004-2005)
Buyer Power and Retail Gatekeeper Power: Protecting Competition and the Atomistic Seller

handle is hein.journals/antil72 and id is 573 raw text is: BUYER POWER AND RETAIL GATEKEEPER POWER: PROTECTING COMPETITION AND THE ATOMISTIC SELLER WARREN S. GRIMES* Buying power issues are critical for today's antitrust bar. Power buyers have faced recent antitrust challenges in industries such as health care, agriculture, and professional sports. The growth of highly efficient super- store retailers, such as Wal-Mart and Price/Costco, has focused attention on the effects of a large retailer's buying power. Despite the importance of buyer power issues, economic and legal analysis of these issues has stumbled, failing to address some old market realities as well as new marketing developments. The result has been inconsistent and poorly reasoned decisions, confusion about what the law is, and a failure to live up to antitrust's goal of protecting competition. Building upon other articles in this Symposium, I examine here two buyer power themes inadequately addressed in the case law and litera- ture. The first is the ubiquity and unique vulnerability of small, atomistic sellers, including not only small businesses, but also farmers, ranchers, fishermen, and loggers; professionals, such as doctors, nurses, and law- yers; professional athletes; and non-union employees, such as freelance reporters and various independent contractors. For reasons that are explored here, these sellers are likely to be more vulnerable to power abuses than are consumers. Their heightened vulnerability is linked to the sunk costs incurred in carrying out a chosen business or profession. In many instances, these sunk costs allow power buyers to suppress input prices without any short-term reduction in input volume. These issues, occasionally but incompletely recognized in the case law, are addressed in Part I. The second theme I explore is the unique power large retailers wield over suppliers. Abusive exercises of retailers' gatekeeper power can occur * Professor, Southwestern University School of Law, Los Angeles. The author is indebted to Peter Carstensen, Paul Dobson, Albert Foer,John Kirkwood, Steven Salop, and Lawrence Sullivan for helpful comments on an earlier draft.