Competition Policy and Antitrust Law: Implications of Developments in Supply Chain Management

• Date: 01 April 2019
• DOI: http://doi.org/10.1111/jscm.12196
• Author: Robert Frankel,Riley T. Krotz,Gregory T. Gundlach
• Published date: 01 April 2019

COMPETITION POLICY AND ANTITRUST LAW:

IMPLICATIONS OF DEVELOPMENTS IN SUPPLY CHAIN

MANAGEMENT

GREGORY T. GUNDLACH

University of North Florida

ROBERT FRANKEL

University of North Florida

RILEY T. KROTZ

University of Tennessee

Building on research in supply chain management (SCM) that aids in the

workings of society, the authors illustrate how SCM research can advance

public policy and law. Using competition policy and antitrust law as an

example, they consider how developments in SCM thought and practice

augment economic understanding of vertical restraints involving mini-

mum resale price maintenance (RPM). Developments affecting the organi-

zation of supply chains, firm-level strategies for the management of retail

distribution, and the interactions of supply chain participants are investi-

gated. The findings advance knowledge of the primary procompetitive and

anticompetitive theories of RPM found in competition policy and antitrust

law. They also illustrate the potential of SCM to expand its reach and

impact through studies that address the interplay of SCM and public pol-

icy and law.

Keywords: antitrust law; competition policy; interfirm interactions; law; management

of supply chains; public policy; resale price maintenance; supply chain organization;

vertical restraints

INTRODUCTION

As a business discipline, the field of supply chain

management (hereafter “SCM”) has emphasized

research that aids in the workings of the firm and its

supply chain partners. Documented in the Journal of

Supply Chain Management and other outlets in the

field, this scholarship has provided important contri-

butions for advancing the management of supply

chains and related fields. Together, these contributions

have significantly advanced business thought and

practice.

In addition to these contributions, some scholars

have expressed the view that SCM can also aid in the

workings of society. An increasing body of scholarship

now examines how SCM can benefit society and

enhance consumer well-being. Much of this work has

focused on sustainability (Bell, Autry, Mollenkopf &

Thornton, 2012; Busse & Mollenkopf, 2017; Carter &

Easton, 2011; Guide Jr & Van Wassenhove, 2001; Pag-

ell & Wu, 2009). However, other contributions

include research on corporate social responsibility

(Xia, Zu & Shi, 2015); food safety, transparency, and

traceability (Liljestrand, 2017; MacKenzie & Apte,

2017; Tsai & Pawar, 2018; Voss, 2013; Wowak, Craig-

head & Ketchen, 2016); healthcare (Abdulsalam,

Gopalakrishnan, Maltz & Schneller, 2015, 2018;

Krichanchai & MacCarthy, 2017; Papert, Rimpler &

Pflaum, 2016; Zepeda, Nyaga & Young, 2016); and

humanitarian logistics (Charles, Lauras, Van Wassen-

hove & Dupont, 2016; Wang, Hazen & Mollenkopf,

2018; Wang, Liu, Lian, Hong & Chen, 2018).

Building on this body of work, a growing number

of researchers have advanced the added view that, as a

part of benefiting society and enhancing consumer

well-being, SCM research can play a role in the devel-

opment and application of public policy and law

April 2019

47

Journal of Supply Chain Management

2019, 55(2), 47–67

©2019 Wiley Periodicals, Inc.

(e.g., Gray, Skowronski, Esenduran & Johnny Rungtu-

sanatham, 2013; Martin, 2005; Pagell, Fugate & Flynn,

2018; Simpson et al., 2015; Wu & Jia, 2018). These

researchers contend that SCM research holds potential

to assist public policymakers, legal professionals, and

others in their efforts to develop and apply public

policy and law. This type of research is the focus of

JSCM’s second Emerging Discourse Incubator (EDI)

(Pagell et al., 2018). Research from fields such as

political science, economics, and law has traditionally

informed the analyses of public policy and law. How-

ever, as the editors point out, “the analyses are often

made without understanding of the systemic

implications [of] supply changes and extended net-

works” (p. 1). To remedy this gap, JSCM’s aim is to

incubate a discourse with major schools of thought at

the intersection of SCM and law, regulation, govern-

ment, and regulatory agencies.

Beyond benefitting society and enhancing consumer

well-being, research at the intersection of SCM and

public policy and law has potential to expand the

reach and impact of SCM. As Pagell et al. (2018, p.

2) explain, “supply chain issues are no longer merely

business issues, but progressively involve the complex

confluence of business, law, social policy, human

rights, politics, and international relations.” These

and other scholars understand that SCM “research

has potential to directly inform policymakers to con-

sider a broader supply chain perspective” (p. 2).

They also recognize that “as scholars in SCM, we

have the unique opportunity, and perhaps the

responsibility, to educate other decision-makers

about the interaction of SCM and public policy and

government regulation” and related areas of societal

interest (p. 2).

Extending the proposition that SCM research can

offer important insights for informing public policy

and law, we illustrate how SCM can augment under-

standing of policy and law involving competition.

Competition policy and antitrust law are vital compo-

nents of a market economy, and competition is an

important aspect of SCM. However, until now policy

and laws addressing competition have not benefited

from an SCM perspective or SCM research. Conse-

quently, there is considerable opportunity for SCM

scholars to contribute to the future development of

this important area of policy and law.

In the sections that follow, we overview the nature

of competition policy and antitrust laws that apply to

supply chains and SCM. Although competition policy

and law are found in other settings (e.g., European

Union Directorate-General for Competition, 2019;

Australian Competition and Consumer Commission),

we address U.S. policy and law. Considering SCM,

competition policy and laws applicable to agreements

between members of a supply chain that restrict one

member’s ability to compete are examined. Known as

“vertical restraints,” these agreements encompass a

variety of SCM-related practices. Thus, they offer a rel-

evant context from which to study the intersection of

SCM research and public policy and law.

To illustrate the potential of SCM research to inform

public policy and law, we show how SCM research

that describes contemporary developments in the

organization of supply chains, firm-level strategies for

the management of retail distribution, and the interac-

tions of supply chain participants augments existing

understanding of a common vertical restraint (i.e.,

resale price maintenance). This examination reveals

important findings from SCM research. These findings

are described, and their implications for advancing

understanding of U.S. competition policy and anti-

trust law involving resale price maintenance are elabo-

rated upon. We conclude by offering guidance to

researchers interested in pursuing the study of public

policy and law, describe a scientific basis for such

research, and elaborate on the value of the research

for both SCM and society. To our knowledge, this is

the first time that the interplay of SCM and competi-

tion policy and antitrust law has been examined in

the SCM literature.

COMPETITION POLICY AND

ANTITRUST LAW

The goal of U.S. competition policy and antitrust

law is to promote a competitive marketplace through

protecting the process of competition from business

practices that unreasonably restrain trade (Areeda &

Hovenkamp, 2018). Vigorous competition conducted

in an open marketplace benefits society. Competition

among business rivals can result in lower prices,

higher quality, more choices, and increased innova-

tion.

A series of federal law comprise the framework for

U.S. competition policy and antitrust law (Federal

Trade Commission, 2018) (see Table 1). At the fed-

eral level, these laws and regulations are enforced

through the Antitrust Division of the U.S. Depart-

ment of Justice and the Federal Trade Commission

(FTC). Disputes are settled in the federal courts.

Depending on the circumstances, other federal law

and regulations may apply to competitive practices.

State laws involving competition and antitrust law

may also apply.

Given the relevance of economics to questions con-

cerning competition, knowledge and experts from

the field of economics are extensively relied upon by

public policymakers, competition enforcement agen-

cies, and legal professionals for developing policy,

enforcing laws, and resolving disputes involving

Volume 55, Number 2

Journal of Supply Chain Management

48