This paper considers the extent to which Michel Foucault's conception of power gives a useful explanation of power relations between firms. It examines the perceived shift in the nature of interfirm relations from the traditional model in which firms operate as autonomous units within a competitive industry, to the co-operative competition model whereby firms engage in co-operation at certain levels of their operations and compete at other levels. It argues that the concepts of power and competition are closely intertwined and that an understanding of how power operates can give a greater understanding of the nature of competition within an industry. However the issue of power relations in the presence of co-operative competition has not been adequately explored by the literature. An analysis of the type of power reflected in interfirm relations is held as being the key to understanding the simultaneous existence of co-operation and competition between firms.