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Tacit Collusion, Firm Asymmetries and Numbers: Evidence from EC Merger Cases

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  • Stephen Davies

    ()
    (Centre for Competition Policy, University of East Anglia)

  • Matthew Olczak

    ()
    (Centre for Competition Policy, University of East Anglia)

  • Heather Coles

Abstract

The purpose of this paper is to identify empirically the implicit structural model, especially the roles of size asymmetries and concentration, used by the European Commission to identify mergers with coordinated effects (i.e. collective dominance). Apart from its obvious policy-relevance, the paper is designed to shed empirical light on the condition under which tacit collusion is most likely. We construct a database relating to 62 candidate mergers and find that, in the eyes of the Commission, tacit collusion in this context virtually never involves more than two firms and requires close symmetry in the market shares of the two firms.

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File URL: http://www.ccp.uea.ac.uk/publicfiles/workingpapers/CCP07-7.pdf
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Bibliographic Info

Paper provided by Centre for Competition Policy, University of East Anglia in its series Working Papers with number 07-7.

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Length: 38 pages
Date of creation: Mar 2007
Date of revision:
Handle: RePEc:ccp:wpaper:wp07-07

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Keywords: Tacit collusion; collective dominance; coordinated effects; European mergers; asymmetries;

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Cited by:
  1. Catherine Roux & Christian Thöni, 2013. "Collusion Among Many Firms: The Disciplinary Power of Targeted Punishment," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 13.02, Université de Lausanne, Faculté des HEC, DEEP.
  2. Fonseca, Miguel A. & Normann, Hans-Theo, 2012. "Explicit vs. tacit collusion—The impact of communication in oligopoly experiments," European Economic Review, Elsevier, vol. 56(8), pages 1759-1772.
  3. Joseph E. Harrington, Jr., 2012. "Evaluating Mergers for Coordinated Effects and the Role of 'Parallel Accommodating Conduct'," Economics Working Paper Archive 601, The Johns Hopkins University,Department of Economics.
  4. Stephen Davies & Matthew Olczak, 2010. "Assessing the Efficacy of Structural Merger Remedies: Choosing Between Theories of Harm?," Review of Industrial Organization, Springer, vol. 37(2), pages 83-99, September.
  5. Aditya Bhattacharjea & Uday Bhanu Sinha, 2012. "Multi-market Collusion with Territorial Allocation," Working papers 217, Centre for Development Economics, Delhi School of Economics.

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