Cartels as Two-Stage Mechanisms: Implications for the Analysis of Dominant-Firm Conduct

In this Article we propose that monopolization conduct be analyzed through the lens of cartel behavior. Although cartels typically suppress interfirm rivalry, in many instances this is not their sole focus. Many cartels operate as two-stage mechanisms. The first stage consists of reaching a consensus on a plan to restrict output or otherwise curb rivalry.

For many cartels, once interfirm rivalry is addressed, the cartel moves to the second stage of activity, in which it uses exclusionary behavior often featured in monopolization cases to ensure the effectiveness of its efforts to restrict output. To illustrate this phenomenon, we draw upon the records of cartel inquiries to provide examples of cartels engaging in overt predation against non-cartel rivals, leveraging into both downstream and horizontally-related markets, exclusively dealing, blocking entry, bundling, tying, raising rivals' costs, and other conduct typically associated with allegations of monopolization.