The antitrust concerns of partial horizontal acquisitions
Duarte Brito, Ricardo Ribeiro, Helder Vasconcelos, 28 September 2013
Horizontal acquisitions affect prices through two channels: by eliminating competition between the firms involved, and by changing the incentives for collusion in the affected industry. This column summarises recent research that quantifies these two effects using a new methodology – one that accounts for the difference between financial interests and corporate control. A study of the disposable-razor industry shows that small firms have the greatest incentive to undercut pricing agreements. After acquisitions, acquiring firms have greater incentives to collude, whereas other firms in the industry are more likely to defect.
Over the past two decades, private equity “has become a vastly more sizable and influential part of the economic landscape” (Lerner et al. 2012).
Topics: Competition policy
Tags: acquisitions, antitrust, Cartels, Collusion, Competition policy, horizontal integration, mergers, price fixing
Do European fines deter price fixing?
Mario Mariniello, 22 September 2013
Cartel fines imposed by the European Commission routinely reach hundreds of millions of euro, having increased since the new 2006 fining policy. This column argues that they are still below their optimal level and come too slowly. Fines were often lower than the additional cartel profits and imposed 10 to 20 years after making the law-breaking decision was made – sometimes after the responsible managers had retired. To speed investigations, the Commission should Increase resources dedicated to inquiries; fines should also be raised.
Anti-cartel enforcement is the least controversial of competition-policy themes. Price fixing, market sharing and other agreements to restrict competition have obvious negative effects on welfare.
Topics: Competition policy, EU policies
Tags: Cartels, competition, EU, price fixing