Estimating the Benefits of Anti-cartel Interventions: The Case of the South African Cement Cartel

Hariprasad Govinda (), Junior Khumalo () and Siphamandla Mkhwanazi ()
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Hariprasad Govinda: Competition Commission, SA
Junior Khumalo: Policy, Research and Analysis, Independent Communications Authority of South Africa
Siphamandla Mkhwanazi: Competition Commission

A chapter in Competition Law Enforcement in the BRICS and in Developing Countries, 2016, pp 309-336 from Springer

Abstract: Abstract Several cross-country studies reveal that there are significant gains from competition law enforcement for both developed and developing countries and the results are robust especially from combating cartels. In this article, we estimate the direct financial benefits to consumers, by deriving estimates of the impact of the Competition Commission’s (Commission’s) intervention following the uncovering of the South African cement cartel. To do this, we estimate the avoided price (overcharge) as a result of the uncovering of the cartel and the avoided duration in years (the avoided duration is the estimated expected future duration of a cartel, using case specific information). Econometric estimation having accounted for cost and demand shifters shows that overcharges were between 7.5 and 9.7 % during the cartel period compared to post-intervention period. Hence calculated total savings to the South African consumers due to Commission’s intervention between 2010 and 2013 calendar year are approximately in the range of R4.5 to R5.8 Billion (US$424.5–US$547.1 Million). Moreover, had the Commission been successful in its first intervention of 2000 dawn raids, the total savings to the South African consumers would have been approximately in the range of R14.9–R19.3 Billion (US$1.4–US$1.8 Billion) between 2000 and 2013. Apart from these financial benefits, we find that the market has generally become more competitive, as evidenced by firms penetrating into regions (provinces) that they were previously not active in.

Keywords: Cartel; Overcharge; Market Allocation; Information exchange; 2SLS; L40; L41 (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:spr:intchp:978-3-319-30948-4_13

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DOI: 10.1007/978-3-319-30948-4_13

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