What Role for Abuse of Superior Bargaining Position Laws?

Posted by Social Science Research Network

What Role for Abuse of Superior Bargaining Position Laws?

Yee Wah Chin (Ingram Yuzek Gainen Carroll & Bertolotti, LLP)

Abstract:      Abuse of superior bargaining position laws prohibit a party to a business arrangement, holding what is considered to be a superior bargaining position relative to another party to the arrangement, from engaging in activities that are deemed to be unfair trade practices. The United States has no law at the federal level regarding “unfair trade practices” generally. With respect to abuse of superior bargaining position in particular, the United States has no law that addresses that concept generally. However, the United States is a federal system, and U.S. states may and do enact laws that overlap with or fill in gaps in federal laws, and/or are inconsistent with federal laws. Many states have specific laws that reflect concerns with superior bargaining positions. A focus on comparative advantage, which is distinct from dominant market position and based on relative bargaining power rather than on market power, may interject antitrust enforcers into commercial negotiations, which government is poorly suited for, and into normal market operations, which may impede normal market functioning. If an abuse of superior bargaining position law is nonetheless adopted or retained, the same economic principles and analytical framework that support abuse-of-dominant-position provisions could be applied to abuse-of-superior-bargaining position provisions. Under this framework, when the conduct challenged as an abuse of superior bargaining position does not have an anticompetitive effect and instead results in enhanced efficiency and increased consumer welfare, it should not be deemed abuse of superior bargaining position.