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August 19, 2008
Antitrust Implications of Aftermarkets
Posted by D. Daniel Sokol
ABSTRACT: Firms which sell or lease a product or service often want to extend their sales into a second market - often called the aftermarket. Thus, a manufacturer of razors also wants to sell replacement blades; a manufacturer of automobiles also wants to sell replacement parts; and the manufacturer of a photocopying machine also wants to provide repair or maintenance services for its machines. While many of these attempts to extend upstream market power into the secondary product market may have pro-competitive justifications and effects, other instances of this behavior may reduce consumer welfare by raising prices, reducing innovation or limiting consumer choice. Several of the categories of potentially anti-competitive behavior, which are used generally to analyze conduct under the antitrust laws - tying arrangements, monopolization and attempts to monopolize - are applicable to the analysis of aftermarkets. This paper identifies a variety of examples of aftermarket restraints; considers their competitive impact; and then discusses the application of traditional antitrust analysis to this phenomenon.
August 19, 2008 | Permalink
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