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Competition Law

Competition Law (10th edn)

Richard Whish and David Bailey
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date: 21 March 2023

p. 58814. Horizontal agreements (2): oligopoly, tacit collusion and collective dominancelocked

p. 58814. Horizontal agreements (2): oligopoly, tacit collusion and collective dominancelocked

  • Richard WhishRichard WhishEmeritus Professor of Law at King’s College London
  •  and David BaileyDavid BaileyProfessor of Practice in Competition Law at King’s College London


Oligopoly exists where a few firms between them supply all or most of the goods or services on a market without any of them having a clear ascendancy over the others. The purpose of this chapter is to examine whether oligopoly presents a particular problem for competition policy and, if so, how that problem should be overcome. The chapter discusses the theory of oligopolistic interdependence and how oligopolies can lead to a well-known problem for competition law and policy: oligopolists are able, by virtue of the characteristics of the market, to behave in a parallel manner and to derive benefits from their collective market power without, or without necessarily, entering into an agreement or concerted practice of the kind generally prohibited by competition law. This phenomenon is known in economics as ‘tacit collusion’ and is the result of each firm’s individual and rational response to market conditions. The chapter identifies possible ways of dealing with the ‘oligopoly problem’, before considering the extent to which Articles 101 and 102 can be used to address that problem. The chapter also discusses UK law and, in particular, the possible use of the market investigations to address market failure that may arise in oligopolies.

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