Collusion through Joint R&D: An Empirical Assessment

This paper tests whether upstream R&D cooperation leads to downstream collusion. We consider an oligopolistic setting where firms enter in research joint ventures (RJVs) to lower production costs or coordinate on collusion in the product market. We show that a sufficient condition for identifying collusive behavior is a decline in the market share of RJV-participating firms, which is also necessary and sufficient for a decrease in consumer welfare. Using information from the US National Cooperation Research Act, we estimate a market share equation correcting for the endogeneity of RJV participation and R&D expenditures. We find robust evidence that large networks between direct competitors – created through firms being members in several RJVs at the same time – are conducive to collusive outcomes in the product market which reduce consumer welfare. By contrast, RJVs among non-competitors are efficiency enhancing

Determinants of the success of remedy offers: Evidence from European Community mergers

Abstract: This article proposes an empirical method for finding the determinants of the size of remedy offers relative to the level required by the European Commission in individual cases. Evidence is presented that merger characteristics, such as the size of the transaction, or the number of horizontal overlaps do not affect the probability of a remedy offer being successful. It is also shown that pre-merger expectations about merger-generated efficiencies increase the likelihood of successful offers. These findings are very important features of EC merger control, and a novelty in the existing literature. If parties are delay-averse, then the complexity of the case matters very little, as merging parties appear to be able to offer something outright acceptable for the Commission. This may lead to a counter-productive situation where less delay-averse mergers become more prone to offering too much, which can result in over-fixing the competition problem for those mergers where savings would be more likely