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Cartel detection in procurement markets

Author

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  • Hüschelrath, Kai
  • Veith, Tobias

Abstract

Cartel detection is usually viewed as a key task of either competition authorities or compliance officials in firms with an elevated risk of cartelization. We argue that customers of hard core cartels can have both incentives and possibilities to detect such agreements on their own initiative through the use of market-specific data sets. We apply a unique data set of about 340,000 market transactions from 36 smaller and larger customers of German cement producers and show that a price screen would have allowed particularly larger customers to detect the upstream cement cartel before the competition authority. The results not only suggest that monitoring procurement markets through screening tools has the potential of substantial cost reductions - thereby improving the competitive position of the respective user firms - but also allow the conclusion that competition authorities should view customers of potentially cartelized industries as important allies in their endeavour to fight hard core cartels.

Suggested Citation

  • Hüschelrath, Kai & Veith, Tobias, 2011. "Cartel detection in procurement markets," ZEW Discussion Papers 11-066, ZEW - Leibniz Centre for European Economic Research.
  • Handle: RePEc:zbw:zewdip:11066
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    References listed on IDEAS

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    Cited by:

    1. Harrington, Joseph E. & Hüschelrath, Kai & Laitenberger, Ulrich & Smuda, Florian, 2015. "The discontent cartel member and cartel collapse: The case of the German cement cartel," International Journal of Industrial Organization, Elsevier, vol. 42(C), pages 106-119.
    2. Kai Hüschelrath & Kathrin Müller & Tobias Veith, 2016. "Estimating damages from price-fixing: the value of transaction data," European Journal of Law and Economics, Springer, vol. 41(3), pages 509-535, June.
    3. Matthias Hunold & Kai Hüschelrath & Ulrich Laitenberger & Johannes Muthers, 2020. "Competition, Collusion, and Spatial Sales Patterns: Theory and Evidence," Journal of Industrial Economics, Wiley Blackwell, vol. 68(4), pages 737-779, December.
    4. Korbinian von Blanckenburg & Marc Hanfeld & Konstantin A. Kholodilin, 2013. "A Market Screening Model for Price Inconstancies: Empirical Evidence from German Electricity Markets," Discussion Papers of DIW Berlin 1274, DIW Berlin, German Institute for Economic Research.
    5. Willem H. Boshoff & Rossouw van Jaarsveld, 2019. "Recurrent Collusion: Cartel Episodes and Overcharges in the South African Cement Market," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 54(2), pages 353-380, March.
    6. Carsten J. Crede, 2019. "A Structural Break Cartel Screen for Dating and Detecting Collusion," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 54(3), pages 543-574, May.
    7. Carsten J. Crede, 2015. "A structural break cartel screen for dating and detecting collusion," Working Paper series, University of East Anglia, Centre for Competition Policy (CCP) 2015-11, Centre for Competition Policy, University of East Anglia, Norwich, UK..
    8. Johannes Wachs & J'anos Kert'esz, 2019. "A network approach to cartel detection in public auction markets," Papers 1906.08667, arXiv.org.
    9. Bedri Kamil Onur Tas, 2017. "Collusion Detection in Public Procurement with Limited Information," Working Papers 1127, Economic Research Forum, revised 08 Oct 2017.
    10. Hüschelrath, Kai & Veith, Tobias, 2011. "The impact of cartelization on pricing dynamics: Evidence from the German cement industry," ZEW Discussion Papers 11-067, ZEW - Leibniz Centre for European Economic Research.
    11. Kai Hüschelrath & Tobias Veith, 2016. "Cartelization, Cartel Breakdown, and Price Behavior: Evidence from the German Cement Industry," Journal of Industry, Competition and Trade, Springer, vol. 16(1), pages 81-100, March.

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    More about this item

    Keywords

    business economics; procurement; antitrust policy; cartels; detection; screening;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • L61 - Industrial Organization - - Industry Studies: Manufacturing - - - Metals and Metal Products; Cement; Glass; Ceramics
    • M11 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Production Management
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law

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