Cartels as Defensive Devices: Evidence from Decisions of the European Commission 2001–2010
-
Daniel Herold
and
Johannes Paha
Abstract
Why would an industry that was not colluding yesterday start colluding today? This article distills insights about cartel formation from 41 cases prosecuted by the European Commission between 2001 and 2010. The case studies examine the events occurring prior to the cartels’ set-up. Cartel formation is affected by changes in prices, demand and customer conduct, capacity utilization, increased imports and entry by competitors, as well as events in the legal and regulatory environment of the firms. Yet, none of these factors serves as a good marker of cartel formation when being regarded in isolation. It rather needs to be analyzed how changes in these factors interact and whether they raise the intensity of competition. In this context, factors that are commonly deemed to destabilize cartels, like entry of new competitors or buyer power, are found to actually foster cartel formation.
Acknowledgements:
5 We would like to thank Christoph Engel (the editor) and an anonymous referee. We are also grateful for the comments provided by the participants of the Competition and Innovation Summer School (CISS, 2013), the participants of the First Conference on Empirical Legal Studies in Europe (CELSE, 2016), and Nicolae Stef who discussed our paper at CELSE. Earlier versions of the article were presented under the title Predicting Cartel Formation.
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Articles in the same Issue
- Empirical Legal Studies: CELS and CELSE
- Missing Rich Offenders: Traffic Accidents and the Impartiality of Justice
- Are Advocates General Political? An Empirical Analysis of the Voting Behavior of the Advocates General at the European Court of Justice
- The More Med-Mals, the Shorter the Litigation: Evidence from Florida
- Police Incentives, Policy Spillovers, and the Enforcement of Drug Crimes
- Determinants of Judicial Efficiency Change: Evidence from Brazil
- Cartels as Defensive Devices: Evidence from Decisions of the European Commission 2001–2010
