Do cartel breakdowns induce mergers? Evidence from EC cartel cases

Kai Hüschelrath and Florian Smuda
Authors registered in the RePEc Author Service: Kai Hueschelrath

No 13-036, ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research

Abstract: We investigate the impact of cartel breakdowns on merger activity. Merging information on cartel cases decided by the European Commission (EC) between 2000 and 2011 with a detailed data set of worldwide merger activity, we find that, first, the average number of all merger transactions increase by up to 51 percent when comparing the three years before the cartel breakdowns with the three years afterwards. Second, for the subset of horizontal mergers, merger activity is found to increase even more - by up to 83 percent - after the cartel breakdowns. Our results not only suggest that competition authorities should consider mergers as potential 'second-best' alternative to cartels but also imply that resource (re)allocations in competition authorities, law practices and economic consultancies may become necessary to handle the increase in merger cases.

Keywords: antitrust policy; cartels; mergers; cartel breakdown; European Union (search for similar items in EconPapers)
JEL-codes: K21 L41 (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-com, nep-eur, nep-hme, nep-ind and nep-law
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:zewdip:13036

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