ECONOMICS OF COLLUSION Cartels , collusion and

Transcript:ECONOMICS OF COLLUSION Cartels , collusion and:
ECONOMICS OF COLLUSION Cartels , collusion and others Sapienza – Economia e Politica Industriale Marzo-Maggio 2023 andrea.pezzoli@agcm.it SOME PRELIMINARY REMARKS TO KEEP IN MIND Consumer welfare standard vs the protection of the competitive process Efficiency as the sole goal of antitrust vs multiple goals Does the economic approach focus solely on efficiency What about economic freedom and dynamic efficiency? «Antitrust protects competition, not competitors» Rather than competition the consumer welfare standard protects the outcome of past competition 2 Cartels, Horizontal agreements, Concerted Practices…The contribution of economic analysis One of the few issues where we register a wide agreement among the the different economic approaches…Collusion is universally disapproved! A wide consensus from Chicago to Hipster antitrust: cartels are the worst of the possible antitrust sins!!! Whatever the efficiency concept, cartels are bad… Definition of relevant markets? Does the definition of relevant market matter in the assessment of cartels? The thin line between explicit and implicit collusion Cartels screening (not to find the thief but to understand if there might be a crime) 3 Cartels, Horizontal agreements, Concerted Practices… “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise price” (Adam Smith, 1776) 4 Detection Deterrence Stability Deviation Maverick Retaliation Leniency Whistleblowing Settlements Compliance Programs Exchange of minds vs. Intelligent and Unilateral Adjustment Cartels, Horizontal Agreements, Concerted Practices: Key words 5 Not all horizontal agreements are restrictive agreements Hard core cartels (illegal per se) and horizontal agreements By object vs by effect: clear dichotomy or moving boundaries? By object does not mean per se Explicit and tacit (implicit) collusion: not only a semantical issue… Cartels, Horizontal agreements, Concerted Practices… 6 Cartels are easier to sustain in: Concentrated industry With a small number of suppliers Similar cost structures Homogeneus goods or services, Stable and inelastic demand, Limited technological change High degree of transparency But even in fragmented and «mature» industries cartels may be seen as a defensive reply to the risk of declining…as a surrogate of an ineffective welfare policy… Where Do We Find Cartels? Economic Analysis and Cartels Screening… 7 Chicago (Bork) and a narrow definition of hardcore cartels: only naked cartels should be illegal per se (i.e. only when cartels are not ancillary to cooperative productive activities engaged by the parties): even price fixing, market sharing or other ways aimed at eliminating