DIVISIONALIZATION IN VERTICAL STRUCTURES

We study the incentives to create divisions by a firm once it is taken into account the vertical structures of an industry. Downstream firms, that must buy an essential input to upstream firms, may create divisions. Divisionalization reduces their bargaining power against upstream firms. This effect must be weighted against the usual incentive to divisionalize, namely the increase in the share of the final market that a firm obtains through it. We show that incentives to divisonalize are severely reduced when compared with the standard results, and that even sometimes firms choose not to divisionalize at all. The paper also shows the implications of the former analysis on the internal organization of firms and on the incentives to vertically integrate.

Análisis forense de los cárteles descubiertos en España

El presente trabajo realiza un análisis forense de los cárteles sancionados por las distintas autoridades españolas de la competencia durante los últimos 25 años. Los resultados muestran cómo se ha producido un cambio sustancial tanto en el número como en las características de cárteles detectados por la autoridad de competencia en España desde la aprobación de la última Ley de Defensa de la Competencia de 2007. En los últimos ocho años (2007-2015) se han descubierto no solo más cárteles, sino también cárteles más estables y persistentes. Esto ha sido posible gracias a la entrada en vigor del programa de clemencia y de otros efectivos instrumentos de inspección, análisis, vigilancia y sanción. En los próximos años, la autoridad de competencia se enfrenta al reto de mantener el impulso de la política anticárteles tras las recientes sentencias judiciales que modifican algunos de los instrumentos a disposición de la autoridad de la competencia en la persecución efectiva de los cárteles

The leniency programme: obstacles on the way to collude

There is no honour among thieves. This aphorism concisely expresses why the leniency programmes in competition policy have become one of the most effective instruments in the fight against the cartels. In this work we describe the dissemination, evolution, and effects of the aforementioned programmes in the two decades since its implementation around the world, paying special attention to what is being done at the European Union level and in Spain. The empirical regularities obtained from the descriptive analysis of leniency decisions adopted by the European Commission and by the Spanish Competition Authority provide relevant information about the effectiveness of their corresponding programmes, as well as information about the underlying reasons why companies, in this context, submit applications for sanction exemption or reductions in the penalty amount. We conclude that still there is scope to increase substantially the dissemination and implementation of the leniency programme in Spain, and if the reforms are handled correctly, the programme is set to catch up and to be the main source of detecting and sanctioning of Spanish cartels in the next decad

Redefiniendo los incentivos a la colusión: el programa de clemencia

Los programas de clemencia se han convertido en uno de los instrumentos más efectivos en la lucha contra los cárteles. En este trabajo describimos la difusión, evolución y efectos de tales programas en las dos décadas de su aplicación alrededor del mundo. De las regularidades empíricas extraídas del análisis de todas las decisiones de clemencia adoptadas en la Unión Europea y en España, concluimos que hay margen para ampliar la difusión y aplicación del programa de clemencia en España, y que si se acierta en las reformas, será la fuente principal de detección y sanción de cárteles en la próxima década

When are Cartels more likely to be formed or broken? The role of business cycles

The literature presents mixed contributions about the economic conditions under which cartels form and collapse, and about how stable they are across firm-specific and industry-wide business cycles. The relationship between cartel life cycles and business cycles has not been sufficiently analyzed to date. In this paper, we study in depth whether collusion is pro-cyclical or counter-cyclical. We analyze the relationship between cartel startups/breakups and economic cycles using a dataset of sanctioned cartels by the European Commission that were active between 1997 and 2012, after the leniency program had already been introduced. We also double check whether this relationship has changed with respect to the pre-leniency period from 1991 to 1996. Our results show that cartels are more likely to be formed in upturns, but that cartels tend to breakup also in booms. Upturns in economic cycles appear to cause cartel turnovers: existing cartels die while new ones are set up. Collusion appears to be pro-cyclical with respect to cartel creation, while it seems to be counter-cyclical with regard to cartel demise

Cartel destabilization effect of leniency programs

This paper investigates the theoretically and empirically unsettled question of the effect of the leniency programs on cartel duration, cartel fines and the length of the investigation. The fact that leniency programs were implemented in two different jurisdictions (EU and Spain) at different moments of time, and the exogeneity of the date of introduction, allow us to identify and quantify the effect of the programs on the outcomes using difference-in-difference program evaluation techniques. We empirically show that leniency programs destabilize existing cartels in the short run as expected from theory and previous empirical papers, and then dissuade the creation of new cartels in the long run. Deterrence effects dominate empirically in the long run, although theoretically they might not dominate, and previous empirical findings were inconclusive. Fines per firm increase substantially after the introduction of the leniency policy, despite whistleblowing firms are partially or totally exempted from fines. The duration of the investigation increases with the introduction of the leniency programs. Leniency programs have sharp and clear short-run cartel destabilization and long-run cartel dissuasion effects

Managers' expectations, business cycles and cartels' life cycle

The literature presents mixed findings regarding the economic conditions under which cartels form and collapse, and regarding how stable they are across firm-specific and industry-wide business cycles. The relationship between cartel life cycles and business cycles has been insufficiently analyzed to date. In this paper, we study in depth whether collusion is pro-cyclical or counter-cyclical. We analyze the relationship between cartel start-ups/break ups and economic cycles using a dataset of sanctioned cartels by the European Commission (EC) that were active between 1997 and 2018, after the leniency program had already been introduced. We also double check whether this relationship has changed with respect to the pre-leniency period from 1991 to 1996. Our results show that cartels are more likely to be formed when the business has evolved positively in the previous months, and cartels are less likely to collapse when the business has evolved positively, and managers expect prices to decline. The EC's sanctioning activity has been an effective deterrent and has had a destabilizing effect on cartels. However we found no evidence that managers' expectations on prices affect cartel formation. All these results are an important issue for anti-cartel policy enforcement since knowing when cartels are more prone or less likely to occur would help authorities prevent their formation or their early detection

25 years of leniency programs: a turning point in cartel prosecution

This contribution reviews what we know about the effectiveness of leniency or amnesty programs in cartel prosecutions. Leniency programs have gradually been adopted by as many as 53 competition policy jurisdictions around the globe during the last 25 years. We show that the available evidence supports that the leniency programs have had a strong impact on anti-cartel policy design and effectiveness. (...

Gestión del conocimiento. Perspectiva multidisciplinaria. Volumen 17

El libro “Gestión del Conocimiento. Perspectiva Multidisciplinaria”, Volumen 17 de la Colección Unión Global, es resultado de investigaciones. Los capítulos del libro, son resultados de investigaciones desarrolladas por sus autores. El libro es una publicación internacional, seriada, continua, arbitrada, de acceso abierto a todas las áreas del conocimiento, orientada a contribuir con procesos de gestión del conocimiento científico, tecnológico y humanístico. Con esta colección, se aspira contribuir con el cultivo, la comprensión, la recopilación y la apropiación social del conocimiento en cuanto a patrimonio intangible de la humanidad, con el propósito de hacer aportes con la transformación de las relaciones socioculturales que sustentan la construcción social de los saberes y su reconocimiento como bien público