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Collusion in markets characterized by one large buyer: lessons learned from an antitrust case in Russia

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  • Andrei Y. Shastitko

    ()
    (National Research University Higher School of Economics)

  • Svetlana V. Golovanova

    ()
    (National Research University Higher School of Economics)

Abstract

This paper demonstrates that even established and verified facts of agreements among producers are not a sufficient condition for cartel identification and, as a consequence, prosecution of agreement participants. Such requires looking at institutional details and the wider context of these and similar appearances or occurrences of documents and actions when qualifying the actions of market participants and their effects. This paper discusses a recent antitrust case brought against Russian manufacturers of large diameter pipes (LDPs) that examined supposedly abusive practices by these firms that were contrary to the law on the Protection of Competition, which prohibits market division. The case under consideration illustrates the importance of investigating institutional details when qualifying the actions of market participants and their effects. An analysis of the materials in this case using modern economic theory indicates that the presence of collusion is inconsistent with the active participation of the main consumer of LDPs in that agreement. The chosen format for the cooperation between pipe manufacturing companies and OJSC Gazprom, namely indicative planning, may be explained from the perspective of reducing contract risk in an environment characterized by large-scale private investments.

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Bibliographic Info

Paper provided by National Research University Higher School of Economics in its series HSE Working papers with number WP BRP 49/EC/2014.

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Length: 18 pages
Date of creation: 2014
Date of revision:
Publication status: Published in WP BRP Series: Economics / EC, February 2014, pages 1-18
Handle: RePEc:hig:wpaper:49/ec/2014

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Keywords: collusion; antitrust policy; credible commitments; indicative planning; contract risk;

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  1. Vasconcelos, Helder, 2008. "Sustaining Collusion in Growing Markets," CEPR Discussion Papers 6865, C.E.P.R. Discussion Papers.
  2. Pedro Mendi & Róbert F. Veszteg, . "Sustainability of Collusion: Evidence from the Late 19th Century Basque Iron and Steel Industry," Faculty Working Papers 04/07, School of Economics and Business Administration, University of Navarra.
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