Monday, October 3, 2011
Posted by D. Daniel Sokol
Ulrich Laitenberger & Kai Huschelrath (ZEW Centre for European Economic Research) advocate The Adoption of Screening Tools by Competition Authorities.
ABSTRACT: These days, the fight against hard-core cartels is ranked high on the agenda of many competition authorities around the world. The recent efforts of, e.g., the European Commission, are not only reflected in policy reforms such as new fining guidelines and the introduction of leniency programs but have already materialized in the form of an improved cartel enforcement record.
From an economic perspective, the fight against hard-core cartels is justified by the clearly negative welfare implications of such "agreements among competitors." In addition to allocative and productive inefficiencies, hard-core cartels typically also cause dynamic inefficiencies thereby harming customers and consumers in several dimensions.
This substantial harm caused by hard-core cartels-together with the absence of any benefit of such agreements-support the classification of hard-core cartels as "per-se violations" in most antitrust laws around the world. As a consequence, competition authorities have two key tasks: first, deter the formation of new cartels; and second, detect, verify, and prosecute existing infringements. Against this background, this article focuses on answers to the following two key questions: (1) What are the general options competition authorities can use to detect cartels? and (2) What specific roles do screening tools that can proactively detect cartels play for competition authorities?