Hub-and-Spoke Arrangements

A hub-and-spoke arrangement is a coordination structure in which competitors do not necessarily deal with each other directly. Instead, a central intermediary, the hub, helps align the behaviour of the spokes. The hub may be a manufacturer coordinating dealers, a distributor coordinating suppliers, a platform mediating rival sellers, or even a service provider that becomes the channel through which commercially sensitive information flows. The danger is obvious. Competitors may appear vertically connected, while in substance they are coordinating horizontally.

In ordinary commerce, this can happen in simple ways. A supplier tells each dealer, one by one, what discount levels other dealers are expected to maintain. A platform algorithm communicates a uniform pricing logic to many sellers who knowingly align around it. A trade intermediary gathers sensitive demand or pricing intentions from rivals and redistributes them in a form that softens competition. The pattern is called hub-and-spoke because the rivals, the spokes, are connected through the central point rather than by direct visible agreement among themselves.

For a long time, Indian statutory language made these cases conceptually awkward because the presumption in Section 3(3) focused on enterprises engaged in identical or similar trade. That could make it harder, at least formally, to sweep in the non-competing intermediary. The 2023 amendment materially changed that position. The proviso to Section 3(3) now states that an enterprise or person not engaged in identical or similar trade shall also be presumed to be part of the agreement if it participates or intends to participate in the furtherance of such agreement. That reform is one of the clearest statutory signals that Indian law now squarely recognises hub-and-spoke cartel risk.

The 2023 amendment also widened Section 3(4) by referring to agreements among enterprises or persons at different stages or levels of the production chain, rather than using narrower older phrasing. That does not convert every vertical arrangement into a cartel. It does, however, make it easier to analyse coordination structures that move across levels of the supply chain. Put simply, the law is now better equipped to catch arrangements that look vertical on the surface but operate horizontally in effect.

Indian decisional practice is still developing, which is why Samir Agrawal remains significant even though it did not produce a final liability finding. In closing the Ola and Uber algorithmic pricing case under Section 26(2), the Commission observed that a hub-and-spoke arrangement generally requires the spokes to use a third-party platform or hub for exchange of sensitive information, including pricing information, and found that the material before it did not establish such an agreement. That order matters because it shows the Commission insisting on evidence of concerted structure, not merely common use of a platform or similar prices. Hub-and-spoke is not a slogan. It is a theory that still needs proof.

The practical proof issues are therefore central. Did the spokes know that the hub was coordinating them. Did the hub transmit competitively sensitive information from one spoke to another. Was there a common plan, or at least mutual awareness, rather than mere parallel vertical dealing. Did the common intermediary actually reduce independent decision-making. These questions become even sharper in digital markets, where pricing tools, recommendation engines, and marketplace rules can influence many firms at once without a classic physical meeting. Indian competition law is clearly moving toward this terrain, but it has not yet produced a large body of final liability rulings that settle every doctrinal detail. That last point is an inference from the existing statutory change and the limited case pattern so far.

A familiar real-world example would be a manufacturer that tells each of its retailers that heavy discounting by any one of them will be detected and answered, while also feeding each retailer information about the others’ expected pricing. If the retailers understand that the manufacturer is effectively organising a common pricing discipline, the structure starts to look like more than a series of bilateral vertical arrangements. It starts to look like a cartel with an organiser. The same logic can travel into marketplaces, algorithms, procurement consultants, and trade associations.

The practical takeaway is that hub-and-spoke cases are about intermediation plus awareness plus coordination. Using the same platform or distributor does not itself create liability. What matters is whether that shared intermediary is being used to further an anti-competitive common design. After the 2023 amendment, Indian law is far better positioned to address such structures. Businesses that sit in the middle of a market should therefore be especially careful about carrying competitively sensitive information from one participant to another, even indirectly. That is where ordinary vertical management can begin to look like horizontal coordination.