Toys Hub-and-Spoke Cartel

Question 1

What was the OFT’s decision regarding the Argos-Littlewoods-Hasbro price fixing scandal?

Answer 1

Littlewoods should be given 100% leniency due to giving info to the Director General of Fair Trading before the investigation commenced
Hasbro also received 100% leniency due to full cooperation
Arogs were fined £17.28 million

Question 2

What is Hub-and-Spoke collusion?

Answer 2

There is intrabrand competition for the supplier’s product
In a normal cartel, retailers A and B will directly contact one another
Hub-and-Spoke instead also involves the manufacturer facilitating the collusion between the retailers

An example:

• This may happen by retailer A saying to the manufacturer “We’re going to raise our prices on Monday to this level. If retailer B follows suit then we will leave it at this level, otherwise we will return prices to normal.”
• The manufacturer then relays this information to retailer B
• Retailer B then decides and gives the manufacturer their answer, who will relay this info to retailer A

This type of collusion occurs because a normal case of collusion will harm manufacturers due to the higher price and reduced quantity of goods sold
Often it is the manufacturer that instigates these cartels