Tools for Reforming Antitrust Policy: Rein in Monopsony Power to Protect Workers’ Wages and Working Conditions
Unlike a monopoly, which is typically characterized as the only (or dominant) seller in a market, monopsony exists where there is a single or dominant buyer in a market. Whereas monopolies can raise prices above competitive levels, the monopsonist tends to lower the price of the goods and services it buys below competitive levels. As a result, the sellers of goods or services are left with nowhere to go when their wares are underpriced.
Abuses of buyer power occur across industries, from agriculture to health care to retail. For example, a dominant purchaser of livestock can depress the prices of crops or animals below competitive levels. Abuses of buyer power are also ubiquitous in labor markets. Massive employers like Amazon and Walmart have been found to depress wages when moving into new regional markets, while thousands of their workers subsist on federal social safety net programs. Dominant hospital systems and health insurers can exert monopsony power over medical providers if those providers have very few alternative purchasers for their services.
Despite recognition that antitrust laws are as concerned about abuse of monopsony power as they are about abuse of monopoly power — and that sellers to a monopsony have been harmed as much as buyers from a monopoly — federal jurisdictions have challenged few instances of monopsony or buyer power.
Abuses of buyer power are not necessarily linked to market dominance or market share. Retailers with relatively low market share can exert significant buyer power over sellers, particularly if a retailer has a simultaneous higher share in a local, harder-to-define market. Even in the absence of a monopsony (as defined by federal law), buyers price discriminate through all-or-nothing contracts, whereby sellers must commit to selling a specific volume at a specified price, or the monopsonist buys nothing. Facing less income and increased uncertainty over future earnings, suppliers may have less incentive to innovate or invest in their equipment. As a result, quality and consumer choice deteriorate.
Still, federal antitrust law requires proof that a defendant possess monopsony power before proceeding with a case alleging abuse of buyer power. This is further complicated by requirements that monopsony power be demonstrated via a high market share held by the power buyer, which rarely exists, even when buyer power has created significant harms.Having buyer power alone does not satisfy this monopsony requirement, even though the harm to the seller still exists.
State lawmakers should create or enhance existing laws against abuses of buyer power by:
- Including explicit and distinct definitions of “monopsony” and “buyer power.”
- Bar evidence of a lack of market share to offset, or as an affirmative defense to, an allegation that a buyer has abused their power over a seller.
- As an alternative to relying solely on market share thresholds, provide factors that a court may consider in determining monopsony or buyer power, including:
- Evidence of inelasticity in the input market; and
- An inability or unwillingness for new purchasers to enter the market, or for existing purchasers to expand their purchases in the market to levels consistent with a competitive market.
- Prohibit evidence of lower prices or other pecuniary gains to consumers to offset antitrust harms to workers.
- Allow for the introduction of direct or indirect evidence in cases alleging an abuse of monopsony or buyer power.
Example Law: New York Senate Bill S933C, the “21st Century Antitrust Act” (link)
 “Courage to Learn,” supra note 14, at p. 139.
 Allen v. Dairy Farmers of Am., Inc., 748 F. Supp. 2d 323 (D. Vt. 2010) (unlawful creation of monopsony power in the milk distribution system through exclusive supply agreements).
 Jones, Janelle and Zipperer, Ben. “Unfulfilled Promises: Amazon fulfillment centers do not generate broad-based employment growth.” Economic Policy Institute, 2018 (noting that state and local governments that give away millions in financial incentives to lure Amazon warehouses don’t get a commensurate return on that investment); see also, “Unfulfillment Centers: What Amazon Does to Wages,” The Economist, January 20, 2018; see also, Dubit, Arindrajit; Lester, William T.; Eidlin, Barry, “A Downward Push: The Impact of Wal-Mart Stores on Retail Wages and Benefits,” UC Berkeley Labor Center, 2007.
 “Millions of Full-Time Workers Rely on Federal Health Care and Food Assistance Programs.” Report to US Government Accountability Office, October 2020.
 W. Penn Allegheny Health Sys., Inc., 627 F.3d 85 (2010).
 Mueller v. Wellmark, Inc., 818 N.W.2d 244, 265 (2012).
 See Stucke, supra note 20.