Monday, July 15, 2013

Proactive vs Reactive Anti-Cartel Policy: The Role of Empirical Screens

Posted by D. Daniel Sokol

Rosa M. Abrantes-Metz Global Economics Group, LLC; New York University - Leonard N. Stern School of Business - Department of Economics has written on Proactive vs Reactive Anti-Cartel Policy: The Role of Empirical Screens.

ABSTRACT: Despite the successes of the last twenty years in cartel detection, there are many who believe that competition authorities have just started to scratch the surface. The focus of this paper is to make the case that proactive detection and deterrence policies need to be put in place worldwide, led by the use of empirical screens. Combining screens with more aggressive corporate compliance programs, whistleblower programs, general business community education and guidelines on collaborations which are likely to be anticompetitive, leniency programs will be supplemented and enhanced and anti-cartel policy will become more effective around the world. Screens can play a critical role in cartel detection and also in deterring cartel formation. Their recent significant successes such as the flagging of the LIBOR conspiracy and manipulation can attest to their power and potential as proactive anti-cartel detection tools around the world. There have always been those who are naturally skeptical that simple empirical analyses can be brought to bear in complex markets. Hopefully, the LIBOR scandal will settle the question of whether screens should be more vigorously applied and move the discussion to how that needs to happen.

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