Cartel overcharges and the deterrent effect of EU competition law

This paper examines cartel overcharges for the European market. Using a sample of 191 overcharge estimates and several parametric and semi- parametric estimation procedures, the impact of different cartel charac- teristics and the market environment on the magnitude of overcharges is analyzed. The mean and median overcharge rates are found to be 20.70 percent and 18.37 percent of the selling price and the average cartel du- ration is 8.35 years. Certain cartel characteristics and the geographic region of cartel operation influence the level of overcharges considerably. Furthermore, empirical evidence suggests that the currently existing fine level of the EU Guidelines is too low to achieve optimal deterrence

The appeals process : an empirical assessment

The appeals process – whereby the losing party of an administrative or judicial decision can seek reconsideration of their arguments before a higher institution – is an important mechanism to correct legal errors and to improve existing laws and regulations. We use data of 467 firm groups that participated in 88 cartels convicted by the European Commission between 2000 and 2012 to study both the characteristics of firm groups filing an appeal and the factors that determine their successfulness in terms of fine reduction. Applying discrete choice models and a two-stage hurdle model, we find that while some characteristics – such as the size and financial condition of the firm group or the clarity of fine guidelines – only affect the probability to file an appeal, other factors such as the size of the fine imposed in connection to characteristics as ringleader, repeat offender or leniency applicant influence both the probability and the success of an appeal. We take our empirical results to derive conclusions for both firms and public policy makers

Do cartel breakdowns induce mergers? : Evidence from EC cartel cases

We investigate the impact of cartel breakdowns on merger activity. Merging information on cartel cases decided by the European Commission (EC) between 2000 and 2011 with a detailed data set of worldwide merger activity, we find that, first, the average number of all merger transactions increase by up to 51 percent when comparing the three years before the cartel breakdowns with the three years afterwards. Second, for the subset of horizontal mergers, merger activity is found to increase even more – by up to 83 percent – after the cartel breakdowns. Our results not only suggest that competition authorities should consider mergers as potential ‘second-best’ alternative to cartels but also imply that resource (re)allocations in competition authorities, law practices and economic consultancies may become necessary to handle the increase in merger cases

Estimating consumer damages in cartel cases

We use consumer panel data to calculate the damage suffered by German consumers due to a detergent cartel that was active between 2002 and 2005 in eight European countries. Applying before-and-after and difference-in-differences estimations we find average overcharges between 6.7 and 6.9 percent and an overall consumer damage of about 13.2 million Euro over the period from July 2004 until March 2005. Under the assumptions that the cartel-induced share on turnover is representative for the entire cartel period and all affected markets, the overall consumer damage would even sum up to about 315 million Euro. Our results further suggest that the retailers reacted to the price increases of the cartel firms via price increases for their own detergent products, resulting in significant umbrella effects. We quantify the damage due to this umbrella pricing to a total of about 7.34 million Euro. With respect to the discussion whether special procedures for bringing collective actions should be available in the EU, our results are important to the extent that we show how consumer associations can use consumer panel data in order to claim damages before national courts and thereby actively fulfill their mandate of consumer protection

A primer on damages of cartel suppliers - determinants, standing US vs. EU and econometric estimation

While private actions for damages by customers against price-cartels receive much attention, the treatment of other groups affected by such conspiracies is largely unresolved. This article narrows the research gap with respect to suppliers to a downstream price cartel. First, we show that such suppliers incur losses driven by a direct quantity, a price and a cost effect. We then analyze whether suppliers are entitled to claim these losses as damages in the two leading competition law regimes. We find that, while the majority view in the US denies standing, the emerging position in the EU and important member states is to grant supplier standing. We argue that this can indeed be justified in view of the different institutional context and the goals assigned to the right to damages in the EU. We finally present an econometric approach based on residual demand estimation that allows to quantify all determinants of cartel suppliers’ damages, thereby showing that supplier damage claims are a viable option in practice that can contribute to full compensation and greater cartel deterrence

Essays on public and private antitrust enforcement

This dissertation contributes to the economic literature on public and private antitrust enforcement by providing four chapters with innovative and policy-relevant contents that allow the deduction of important implications for the enforcement of antitrust law. In particular, econometric and statistical methods are applied and extended in order to explore the price-setting behavior of cartels in Europe and the status quo of cartel deterrence (chapter 2), to provide new insights regarding the quantification of cartel damages of cartel suppliers (chapter 3) and final consumers (chapter 4), and to analyze the relation between cartel breakdowns and merger activity in former cartel industries (chapter 5). Chapter 6 concludes the thesis by summarizing the main results and emphasizing the contribution of each preceding chapter to the literature on public and private antitrust enforcement. In addition, policy implications as well as new fields of research that arose from the results of the investigated subtopics are described.Die Dissertation befasst sich mit ökonomischen Fragen zur Kartellrechtsdurchsetzung und liefert neue Einsichten und Erkenntnisse für eine effizientere öffentliche und private wettbewerbspolitische Durchsetzung des Kartellrechts. Nach einem detaillierten Literaturüberblick zu Kartellen und zur europäischen Kartellrechtsdurchsetzung in Kapitel 1 werden im Rahmen der Arbeit statistische und ökonometrische Verfahren angewendet und erweitert, um das Preissetzungsverhalten von Kartellen in Europa sowie den status quo bestehender Kartellabschreckung zu analysieren (Kapitel 2), um neue Erkenntnisse hinsichtlich der Quantifizierung der Kartellschäden von Kartellzulieferern (Kapitel 3) und Endkonsumenten (Kapitel 4) zu gewinnen, und um den Zusammenhang zwischen Kartellzusammenbrüchen und Fusionsaktivitäten in ehemaligen Kartellindustrien näher zu beleuchten (Kapitel 5). Im abschließenden sechsten Kapitel der Dissertation werden die Ergebnisse der vorangegangenen Kapitel zusammengefasst und Implikationen für die übergeordnete Fragestellung der Kartellrechtsdurchsetzung diskutiert

BoSSS: a package for multigrid extended discontinuous Galerkin methods

The software package BoSSS serves the discretization of (steady-state or time-dependent) partial differential equations with discontinuous coefficients and/or time-dependent domains by means of an eXtended Discontinuous Galerkin (XDG, resp. DG) method, aka. cut-cell DG, aka. unfitted DG. This work consists of two major parts: First, the XDG method is introduced and a formal notation is developed, which captures important numerical details such as cell-agglomeration and a multigrid framework. In the second part, iterative solvers for extended DG systems are presented and their performance is evaluated

Cartel enforcement in the European Union: determinants of the duration of investigations

We provide an empirical assessment of EC cartel enforcement decisions between 2000 and 2011. Following an initial characterisation of our dataset, we especially investigate the determinants of the duration of cartel investigations. We are able to identify several key drivers of investigation length such as the Commission’s speed of cartel detection, the type of cartel agreement, the affected industry or the existence of a chief witness

The Discontent Cartel Member and Cartel Collapse: The Case of the German Cement Cartel

We hypothesize a particular source of cartel instability and explore its relevance to understanding cartel dynamics. The cartel instability is rooted in the observation that, upon cartel formation, the relative positions of firms are often fixed which may lead some growth-conscious members to be discontent. This incongruity between a cartel member\u27s allocated market share and its desired market share may result in systematic deviations and the eventual collapse of the cartel. This hypothesis is then taken to the German cement cartel of 1991–2002. We argue that Readymix was such a discontent cartel member and, using a rich pricing data set, are able to characterize how Readymix deviated, how other firms responded, and how it led to the collapse of the cartel

Determinants of self-reporting under the European corporate leniency program

We empirically investigate the determinants of self-reporting under the European corporate leniency program. Applying a data set consisting of 442 firm groups that participated in 76 cartels decided by the European Commission between 2000 and 2011, we find that the probability of a firm becoming the chief witness increases with its character as repeat offender, the size of the expected basic fine, the number of countries active in one group as well as the size of the firm’s share in the cartelized market. Our results have important implications for an effective prosecution of anti-cartel law infringers