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INTRODUCTION
Reciprocal dealing, also known as reciprocity, describes ways in which a buyer may unlawfully use its economic position in one market coercively to secure a competitive advantage in another. Reciprocity typically refers to the use of the buyer's power as buyer of product A to induce the supplier of A to purchase buyer's product B. More colloquially, reciprocity "exists when one party tells the other: `I'll buy from you, if you buy from me.'"1 For example, auto maker ABC may say to USX that it would buy steel from USX if USX would buy ABC trucks. Another example of reciprocity is an agreement by a seed producer to buy products grown from its seed if and only if the farmer growing the product purchases its seed from the seed producer. The reciprocity label is also used in the situation in which a party conditions its decision to purchase (or sell) product A on the willingness of the supplier (or customer) to sell product B to it.
Reciprocity has long been recognized as "one of the congeries of anticompetitive practices at which the antitrust laws are aimed."2 The earliest cases, dating back to the 1930s, involved challenges to reciprocal dealing by the Federal Trade Commission (FTC) as an unfair method of competition.3 Since that time, reciprocal dealing has been attacked under the antitrust laws on three fronts: (1) under section 1 of the Sherman Act4 as a restraint of trade analogous to unlawful
tying; (2) under section 2 of the Sherman Act5 as unlawful monopolization and attempted monopolization; and (3) under section 7 of the Clayton Act.6 At the height of its popularity in the late 1960s and early 1970s, reciprocal dealing was widely viewed as anticompetitive and reciprocity theory was used by federal antitrust enforcers to challenge conglomerate mergers and to challenge certain corporate buying practices as exclusionary.7 In these enforcement efforts, the government enjoyed some modest success and was able to obtain consent decrees ending reciprocal dealing practices.8
The view that reciprocal dealing posed a threat to competition, however, was not unanimous. Thomas Kauper was skeptical about reciprocity as a theory of competitive harm, and under his leadership (1972-76), the Antitrust Division began to
re-examine its approach to reciprocal dealing. Kauper did not...