2012 Conference Review – Second Session, Room 1

(review by Antje Kreutzmann, CCP PhD Student)

After the lunch break, the CCP Conference continued with the second session. The second session was designed as parallel sessions with two sessions running concurrently. Each of the two session consisted of three presentations.

In Room 1, Kai Hüschelrath (ZEW Mannheim) was introduced as first speaker by Yan Li (CCP and Norwich Business School), who chaired this session. Kai presented joint work with Tobias Veith on ‘The Impact of Cartelization on Pricing Dynamics – Evidence from the German Cement Industry’. Their study concentrates on finding empirical evidence on pricing dynamics of hardcore cartels by analysing a unique private data set consisting of approximately 340,000 market transactions from 36 customers of German cement producers and combining those results with findings from a public data set, which was continuously collected by the German Federal Statistical Office. The paper aims to find out “whether and to what extent the pricing dynamics of cartel members and non-cartel members diverge during and after the breakdown of the cartel”.  Following a descriptive approach their study reveals that cartel members have a higher average gross price than non-cartelists and that cartelists reduce the net price to a larger extent then the gross price. Furthermore, it was shown that the difference in the net price development between these two groups is much smaller. After the breakdown of the cartel, the former cartelists decrease the net price significantly and the non-cartel members try to bring their net price into line with the cartelists’ price. The results found in their descriptive study are supported by an econometric analysis.

Then, Bruce Wardhaugh (Newcastle University) presented his research on ‘Cartel Control, Public and Private Sanctions: Lessons Europe can Learn from American Experience’. At first, Bruce gave a historical overview over the American system of cartel control by explaining the early public enforcement of the Sherman Act and the development of criminal enforcement and criminal sanctions.  He, then, highlighted important features of the American Civil Regime, for example, treble damages and class actions. According to Bruce, additional aspects for effective cartel control are the threat of individual and corporate punishment as well as “certainty of punishment”, which was introduced by the Comprehensive Crime Control Act. Bruce believes that in contrast to the US, the private enforcement regime, the individual sanctions and the civil regime in Europe are too weak to control cartels successfully. He suggested, inter alia, the introduction of private damages in Europe to improve the European system of cartel control.

The third presentation was given by Morten Hviid ( CCP) on ‘Regulation vs. Self-help: A natural experiment’. This study, which was pointed out to be work in progess, is joint work with Sebastian Peyer (CCP) who was one of the co-organisers of this year’s conference. After a brief summary of the advantages and disadvantages of different level of enforcement through competition authorities, regulatory authorities or private firms, Morten turned to their natural experiment from the German energy market. The German energy market is a good example for studying regulation versus self-help as the regulator was established not until 2005. Before the introduction of a regulatory authority, the market relied on competition authorities and private enforcement. The analysis of their study shows that the number of private actions did not drop with the introduction of a sector regulator.

All of the three presentations where followed by thought-provoking comments. Unfortunately, due to a stringent schedule Yan Li had the unpleasant task to restrict the lively discussions to avoid an overrun of the allotted time.

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