Firm's damages from antitrust & abuse of dominant position investigations
Competition authorities carry out investigations and impose legal penalties on firms which are caught infringing the competition law. The rationale of this policy is to prevent firms from distorting free competition in a way that is detrimental to economic efficiency and at the same time to deter them from engaging in cartels and other anti-competitive behaviour. In this paper I try to evaluate the impact of major antitrust & abuse of dominant position investigations on firm’s financial value. For this purpose I divide the period of each investigation into two sub periods: the ‘Investigation period”, which begins from the outset of the anticompetitive case and ends when the competition authority issues the statement of objections to the infringed firms and the ‘Deterrence period’, which follows the ‘Investigation period’ and ends with the final judgment of the court. I use aggregate regression based approach to estimate the Average & Cumulative Average Residuals of the firms which infringe articles 1 & 2 of Greek Competition Law. The empirical results imply that the release of the final decisions of the Hellenic Competition Commission and the Court of Appeal negatively affect the share price of the infringed firms.
|Date of creation:||01 Jul 2011|
|Date of revision:||13 Aug 2011|
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- Bartholdy, Jan & Olson, Dennis & Peare, Paula, 2006.
"Conducting event studies on a small stock exchange,"
Finance Research Group Working Papers
F-2006-03, University of Aarhus, Aarhus School of Business, Department of Business Studies.
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- Bizjak, John M & Coles, Jeffrey L, 1995. "The Effect of Private Antitrust Litigation on the Stock-Market Valuation of the Firm," American Economic Review, American Economic Association, vol. 85(3), pages 436-61, June.
- Schwert, G William, 1981. "Using Financial Data to Measure Effects of Regulation," Journal of Law and Economics, University of Chicago Press, vol. 24(1), pages 121-58, April.
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