July 27, 2020

GPOs – Not Just for the Healthcare Industry

It is widely acknowledged that joint purchasing arrangements or commonly used Group Purchasing Organizations (“GPOs”) can result in significant benefits for consumers and markets. For example, they may enable participants to secure volume discounts, reduce transaction costs associated with negotiations, or combine transportation and storage functions to operate more efficiently. However, because joint purchasing arrangements typically involve multiple competitors, they can also raise antitrust concerns—particularly when the participants account for a large share of the relevant markets. In recent years, discussion about joint purchasing arrangements has largely been focused on the healthcare industry, where collaborative buying agreements for the purchase of products and services used in hospitals or other medical facilities are fairly common. However, the benefits of joint purchasing arrangements are not limited to the healthcare space and— when structured properly—companies across industries can achieve efficiencies from these types of arrangements. 

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