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Preventing Innovative Cooperations: The Legal Exemptions Unintended Side Effect

Christian Growitsch (), Nicole Nulsch and Margarethe Rammerstorfer

No 6/2008, IWH Discussion Papers from Halle Institute for Economic Research (IWH)

Abstract: In 2004, European competition law had been faced with considerable changes due to the introduction of the new Council Regulation No. 1/2003. One of the major renewals was the replacement of the centralized notification system for inter-company cooperations in favor of a so-called legal exemption system. We analyze the implications of this reform on the agreements firms implement. In contrast to previous research we focus on the reform's impact on especially welfare enhancing, namely innovative agreements. We show that the law's intention to reduce the incentive to establish illegal cartels will be reached. However, by the same mechanism, also highly innovative cooperations might be prevented. To avoid this unintended effect, we conclude that only fines but not the monitoring activities should be increased in order to deter illegal but not innovative agreements.

Keywords: Competition policy; competition law enforcement; legal exemption system (search for similar items in EconPapers)
JEL-codes: K42 L40 (search for similar items in EconPapers)
Date: 2008
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Journal Article: Preventing innovative cooperations: the legal exemptions unintended side effect (2012) Downloads
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