Cartel Enforcement and Deterrence Over the Life of A Competition Authority

Armoogum, Khemla P; Davies, Stephen; Mariuzzo, Franco

doi:10.2139/ssrn.2993149

Cited by 4 publications

(3 citation statements)

References 24 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…[6] uses a cartel birth-death model to make inferences on EU cartel detection rates. [1] applies a logic similar to Miller, to the long-term trends in cartel discoveries observed in an international panel of CAs. They find evidence of an inverse U-shape relationship, which they attribute to the gradual increase over time in deterrence as CAs become more successful in their enforcement.…”

Section: Accepted Manuscriptmentioning

confidence: 99%

“…While we observe some of the cartels that form, we do not know the cartels that would have formed in the absence of competition law and enforcement. 1 The objective of this paper is to develop and implement a strategy for assessing whether competition law and enforcement is effective in deterring some cartels from forming and constraining the overcharges set by those cartels that do form. Using the standard theory of collusion, we first derive a testable implication if firms are taking into account anti-cartel enforcement when they decide on whether to form a cartel and what prices to charge.…”

mentioning

confidence: 99%

See 1 more Smart Citation

Does enforcement deter cartels? A tale of two tails

Bos

Davies

Harrington

et al. 2018

International Journal of Industrial Organization

View full text Add to dashboard Cite

This paper investigates the deterrent impact of anti-cartel enforcement. It is shown theoretically that if enforcement is effective in deterring and constraining cartels then there will be fewer cartels with low overcharges and fewer with high overcharges. This prediction provides an indirect method for testing whether the enforcement of competition law is effective. Using historical data on legal cartels to generate the counterfactual, we find significantly less mass in the tails of the overcharge distribution, compared to illegal cartels. This result is robust to controlling for confounding factors, and we interpret this as the first tentative confirmation of effective deterrence.

show abstract

Section: Accepted Manuscriptmentioning

confidence: 99%

mentioning

confidence: 99%

Does enforcement deter cartels? A tale of two tails

Bos

Davies

Harrington

et al. 2018

International Journal of Industrial Organization

View full text Add to dashboard Cite

show abstract

“…As described by Armoogum et al (2017), a competition authority may have a very low caseload either because it is ineffective in detecting anticompetitive behaviour or because it is so effective in deterring such behaviour that few cases remain to be detected. Likewise, a more effective enforcement and the resulting increase in deterrence leaves fewer cases still to be detected and then deterred.…”

Section: The Relation Between Detection and Deterrence Is Non-linearmentioning

confidence: 99%

Modelling the Diffusion of the Deterrent Effects of Competition Policy

Dierx¹,

Ilzkovitz²,

Pataracchia³

et al. 2023

Journal of Competition Law &Amp; Economics

View full text Add to dashboard Cite

Through its competition policy interventions, the European Commission not only addresses infringements of EU competition law by the firms directly involved but also deters possible future anticompetitive behaviour by these firms and other market players. The present paper associates deterrence with the diffusion of information about the competition authority’s interventions to market players. In the mixed-influence diffusion model developed below, competition policy interventions act as an external signal sent to market players. Interactions between market players, in particular through legal counsels and law firms, further propagate the interventions’ deterrent effects. The focus of the model simulations is on interventions by the European Commission. The parameters of the mixed-influence diffusion model are calibrated using survey-based information on the order of magnitude of the deterrent effects of competition policy interventions and an assessment of the reputation of the European Commission as an enforcer of EU competition rules. On this basis, estimates of the deterrent effect of each individual intervention by the European Commission can be obtained. In addition, the sensitivity of the deterrent effects of competition policy interventions to the reputation of the competition authority and to the importance of interactions between market participants is analysed.

show abstract

Do Research Joint Ventures Serve a Collusive Function?

Sovinsky

2021

Journal of the European Economic Association

View full text Add to dashboard Cite

Every year thousands of firms are engaged in research joint ventures (RJV), where all knowledge gained through R&D is shared among members. Most of the empirical literature assumes members are non-cooperative in the product market. But many RJV members are rivals leaving open the possibility that firms may form RJVs to facilitate product market collusion. We examine this by exploiting variation in RJV formation generated by a policy change that affects the collusive benefits but not the research synergies associated with a RJV. We use data on RJVs formed between 1986 and 2001 together with firm-level information from Compustat to estimate a RJV participation equation. After correcting for the endogeneity of R&D and controlling for RJV characteristics and firm attributes, we find the decision to join is impacted by the policy change. We also find the magnitude is significant: the policy change resulted in an average drop in the probability of joining a RJV of $41\%$ among computer and semiconductor manufacturers, $34\%$ among telecommunications firms, and $33\%$ among petroleum refining firms. Our results are consistent with research joint ventures serving a collusive function.

show abstract

Cartel Enforcement and Deterrence Over the Life of A Competition Authority

Cited by 4 publications

References 24 publications

Does enforcement deter cartels? A tale of two tails

Does enforcement deter cartels? A tale of two tails

Modelling the Diffusion of the Deterrent Effects of Competition Policy

Do Research Joint Ventures Serve a Collusive Function?

Contact Info

Product

Resources

About