‘Monopolization Conduct by Cartels’

The CCP Seminar Series continues on Friday 5th February 2016, as another exciting new recruit, Lily Samkharadze (CCP & NBS), makes her CCP debut with her presentation, ‘Monopolization Conduct by Cartels‘ (joint work with Robert Marshall and Leslie Marx). Lily has recently started  her new role as a Lecturer in Competition Economics at the Norwich Business School. She writes extensively in the field of competition policy and competition economics, and has also been nominated for a 2016 Antitrust Writing Award for an article in the International Journal of Industrial Organization. An abstract for Lily’s paper can be found below.


Collusion enhances profits of cartel firms, but collusive profits are reduced by the presence of rival firms outside the cartel. We construct a model in which a firm that was not invited to join, or that chose to remain outside the cartel, can potentially be eliminated through monopolization conduct by the cartel. This conduct increases profits for cartel members due to both the diminished competition and the decreased potential for secret deviations by cartel firms. Because of this latter effect, incentives for monopolization conduct are stronger for cartels that have not fully suppressed rivalry relative to those that have.

The seminar takes place from 13:00-14:00 in TPSC 2.03. Tea will be provided directly afterwards in the MBA Café (Floor 2, TPSC).

‘Transition from Explicit to Tacit Collusion and the Bias in Cartel Damage Estimates’

We’re into November but still plenty more insightful seminars on competition policy await us this Autumn. We continue the series this week with our very own Carsten Crede (CCP & ECO), presenting his research on ‘Transition from Explicit to Tacit Collusion and the Bias in Cartel Damage Estimates‘. Carsten is a PhD researcher at the UEA School of Economics and his research interests include industrial organisation and applied econometrics.  An abstract for his presentation can be found below.


We explore the determinants of the incidence and magnitude of post-cartel tacit collusion. In a market experiment we allow periods of explicit communication under different competitive regimes followed by periods of no-communication, in which tacit agreements may take place. In the communication phase, we separately employ fines with and without leniency, firms’ ability to use targeted punishment, and experience of prior non-communication market contact. Even though there are differences in the magnitude, we find that the incidence of post-cartel tacit collusion is a robust common phenomenon across treatments. Moreover, the magnitude of tacit collusion is determined specifically by preceding success of formation and stability of explicit cartels. This indicates that the standard methods of estimating cartel damages may have a downward bias as they do not consider the damages caused by the post cartel tacit collusion. Overcharge estimations show that this bias increases with preceding cartel success. Finally, since it is possible from the results to rank different competitive regimes in terms of the formation and stability of successful explicit cartel, this study can also provide prescriptions regarding minimizing such overall damages.

The seminar takes place from 13:00-14:00 on Friday 7th November in the Thomas Paine Study Centre, Room 1.03.

‘The effects of asymmetric costs on cartel damages: The importance of the counterfactual’

The CCP seminar returns from its Easter break on Friday 2nd May and we are delighted to welcome Peter Møllgaard (Copenhagen Business School) to the Centre. Peter will be presenting his article entitled ‘The effects of asymmetric costs on cartel damages: The importance of the counterfactual‘ which he has written with his colleague at Copenhagen, Petter Berg. An earlier draft of the article can be found at this link, and an abstract for the paper can be found below.


Cartel overcharges and the resultant damages and welfare losses are typically calculated by subtracting counterfactual prices from cartel prices. We determine both prices in a repeated game with cost asymmetries and product differentiation. Whereas cost asymmetries and product differentiation signifcantly affect counterfactual prices, they only have small effects on collusive prices. We find that over-charges and losses in consumer welfare increase with the degree of cost symmetry and substitutability of products. The case of symmetric costs and homogeneous products makes for the extreme case in which welfare losses are maximal and restitution of damages undercompensates consumers the most.

The seminar will take place from 13:00-14:00 in the Elizabeth Fry Building, Room 1.01.

‘Collusion under Private Monitoring with Asymmetric Capacity Constraints’

On Friday 21st March 2014, the Centre welcomes the return of an old friend in the form of former CCP Research Associate and Post Doctoral Fellow Luke Garrod (Loughborough University). Luke will be presenting his paper entitled ‘Collusion under Private Monitoring with Asymmetric Capacity Constraints‘ which he has written with fellow CCP alumna Matthew Olczak (Aston University). An abstract for their article can be found below.


We explore the effects of asymmetries in capacity constraints on collusion where demand is uncertain and where firms must monitor the agreement through their privately observed sales and prices. We show that deviations will be detected perfectly when demand fluctuations are sufficiently small. Otherwise, monitoring is imperfect and punishment phases must occur on the equilibrium path. Collusion is hindered in both cases when the largest firm has more capacity and when the smallest firm has less. We demonstrate that a merger with a collusive symmetric outcome can have a lower average best equilibrium price than a more asymmetric noncollusive outcome.

The seminar will take place from 13:00-14:00 in the Thomas Paine Study Centre, Room 1.1.

Policy Briefing – ‘Mergers after cartels: How markets react to cartel breakdown’

Policy Briefing of CCP Working Paper 14-1:

Davies S, Ormosi P and Graffenberger M, ‘Mergers after cartels: How markets react to cartel breakdown‘ (Available to download from Working Papers 2014 on the CCP website).


  • Anti-cartel enforcement is widely heralded as the single most important part of antitrust activity. But there have been only a few studies analysing how markets react to the elimination of cartels.


  • The authors approach cartel detection from a dynamic perspective by analysing what happens in markets in the years after a competition authority has detected a cartel. At issue is whether markets revert to competitive behaviour or whether firms find alternative ways of reinstating collusive equilibria (short of cartelisation) in the longer run.

  • Data was collected on mergers, acquisitions and joint ventures between firms involved in those cartels for which the European Commission issued decision documents between 1990 and 2012. The useable sample is 84 cartels that were detected between 1984 and 2009.

  • Three questions are posed:

1. Was there more intense merger activity amongst the former cartelists in the years immediately following breakdown?

2. Were certain types of cartel more likely than others to be followed by merger?

3. Is there evidence that the competition authority intervened in those proposed mergers which were most likely to raise potential anti-competitive concerns, or is there evidence of deterrence of such mergers?

  • The authors employ a novel application of survival analysis.

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‘Moral Hazard, Quantity Competition and Why Consumers Should Care About Firms’ Agency Problems’

This week’s CCP seminar takes place on Friday 1st November with David Deller (CCP), who has recently joined the Centre as a Research Associate, presenting his research on ‘Moral Hazard, Quantity Competition and Why Consumers Should Care About Firms’ Agency Problems‘. An abstract for his seminar can be found below.


In textbook models of competition, firms are treated as ‘black-box’ profit functions. The paper opens up this ‘black-box’ to highlight the conditions when a standard moral hazard problem within firms can have a significant downward impact on the expected outcome of quantity competition. In a parameterised model, it is shown that, as a market grows “large”, the equilibrium expected output of firms suffering from moral hazard problems is significantly lower than the expected output when firms without moral hazard problems collude. Furthermore, it is shown that firms may not undertake a costly investment in monitoring despite it being welfare enhancing. The negative impact of moral hazard on market outcomes gives a justification for consumers, and not just shareholders, to care about how firms resolve their internal agency problems. Also, time permitting, a discussion of the potential for product market collusion to be achieved via collusion in the incentive contracts offered by firms to their workers will be given.

The seminar takes place from 13:00-14:00 in the Thomas Paine Study Centre, Room 1.4.

Dr Peter Whelan publishes a case note on the CISAC judgment in the Journal of European Competition Law and Practice

In April 2013 the General Court partially annulled the Commission’s CISAC decision on the basis that there was a lack of sufficient evidence to prove a concerted practice involving copyright collecting societies. Dr Whelan‘s case note explains the judgment and analyses its future implications.

To access the case note, please click here.

‘Cartels as Children of Hard Times, Antitrust Recidivism, and the Managerial Firm’

For this Friday’s research seminar, the Centre is delighted to welcome Professor Steve Martin (Krannert School of Management, Purdue University) who will be presenting his research on ‘Cartels as Children of Hard Times, Antitrust Recidivism, and the Managerial Firm‘. Steve presented an earlier version of this paper at the 39th Annual EARIE Conference in September of last year, a version of which is available for download here. A short abstract for his article can be found below.


In industries where the technology requires large fixed and sunk investment and there are severe demand fluctuations, in downturns decision-makers face a loss of control if they collude and are caught and they face a loss of control if they do not meet financial obligations. In these circumstances, corporate fines for detected collusion are unlikely to provide effective deterrence.

Steve will also be speaking as part of the CCP’s Summer Conference which is taking place next week. An abstract for his presentation on ‘Shaping U.S. Antitrust Institutions’ can be downloaded from our profiles page, along with the abstracts of our other guest speakers.

Policy Brief: Ringleaders in larger numbers, asymmetric cartels


The conventional theoretical wisdom is that collusion is more likely in markets in which firms are few and symmetric, because asymmetry and greater numbers create incentives to deviate in the collusive and punishment phases.

However, many real world cartels involve relatively large numbers of firms, who often exhibit considerable asymmetries in size.


  • The authors explore how far the ringleader can be interpreted as an organisational mechanism enabling cartelists to overcome cartel problems in those instances where they are likely to be most pronounced, that is, when cartels comprise relatively large numbers of asymmetric firms.
  • The study draws on a sample of 89 prosecuted European cartels over the period 1990-2008.


  • The EC was able to explicitly identify a ringleader or ringleaders in 19 of the 89 cartels.
  • Where the ringleader engages in ‘aggressive’ activities, it tends to be the largest member or members of the cartel. But where the activities of the ringleader are confined to a more facilitating organisational nature, it is not uncommon to observe a number of ringleaders, some or all of whom are not dominant.
  • Ringleaders only occur where the conspiracy involves price fixing or bid rigging. Other forms of agreement do not appear to require a ringleader.
  • Ringleaders are less common where an existing Trade Association may be able to fulfil similar roles.
  • The European Commission appears to have had an increasing propensity to name ringleaders in the 1990s, but this has been reversed since 2000. This is consistent with a deterrent role from the increasingly asymmetric fines imposed on ringleaders.
  • The evidence strongly confirms that ringleaders are statistically more likely in cartels with a relatively large number of members who are asymmetrically sized.


Collusion may not be confined to small-number symmetric-size distributions of firms.


Stephen Davies is a Professor in the UEA School of Economics and CCP faculty member, Oindrila De is an Assistant Professor at the Indian Institute of Management, Indore.