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

Author

Listed:
  • 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.

Suggested Citation

  • Stephen Davies & Matthew Olczak & Heather Coles, 2007. "Tacit Collusion, Firm Asymmetries and Numbers: Evidence from EC Merger Cases," Working Papers 07-7, Centre for Competition Policy, University of East Anglia.
  • Handle: RePEc:ccp:wpaper:wp07-07
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    File URL: http://www.ccp.uea.ac.uk/publicfiles/workingpapers/CCP07-7.pdf
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    Citations

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    Cited by:

    1. Bhattacharjea, Aditya & Sinha, Uday Bhanu, 2015. "Multi-market collusion with territorial allocation," International Journal of Industrial Organization, Elsevier, vol. 41(C), pages 42-50.
    2. Axel Sonntag & Daniel John Zizzo, 2015. "Institutional authority and collusion," Southern Economic Journal, Southern Economic Association, vol. 82(1), pages 13-37, July.
    3. 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.
    4. Roux, Catherine & Thöni, Christian, 2015. "Collusion among many firms: The disciplinary power of targeted punishment," Journal of Economic Behavior & Organization, Elsevier, vol. 116(C), pages 83-93.
    5. Fourberg, Niklas, 2017. "Let's lock them in: Collusion under Consumer Switching Costs," Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168097, Verein für Socialpolitik / German Economic Association.
    6. 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.
    7. Luke Garrod & Matthew Olczak, 2017. "Collusion Under Imperfect Monitoring with Asymmetric Firms," Journal of Industrial Economics, Wiley Blackwell, vol. 65(3), pages 654-682, September.
    8. Bruce Lyons & Minyan Zhu, 2013. "Compensating Competitors or Restoring Competition? EU Regulation of State Aid for Banks During the Financial Crisis," Journal of Industry, Competition and Trade, Springer, vol. 13(1), pages 39-66, March.
    9. Garrod, Luke & Olczak, Matthew, 2016. "Collusion, Firm Numbers and Asymmetries Revisited," MPRA Paper 74352, University Library of Munich, Germany.
    10. Stephen Davies & Matthew Olczak, 2010. "Assessing the Efficacy of Structural Merger Remedies: Choosing Between Theories of Harm?," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 37(2), pages 83-99, September.

    More about this item

    Keywords

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

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices

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