Tuesday, October 21, 2014
Fight Cartels or Control Mergers? On the Optimal Allocation of enforcement Efforts within Competition Policy
Andreea Cosnita (EconomiX - CNRS) and Jean-Philippe Tropeano (CES) ask Fight Cartels or Control Mergers? On the Optimal Allocation of enforcement Efforts within Competition Policy.
ABSTRACT: This paper deals with the optimal enforcement of competition law between merger and anti-cartel policies. We examine the interaction between these two branches of antitrust, given the budget constraint of the public agency, and taking into account the ensuing incentives for firms in terms of choice between cartels and mergers. To the extent that a tougher anti-cartel action triggers more mergers and vice-versa, we show that the two antitrust branches are complementary. However, if the merger's coordinated effect is taken into account, then for a sufficiently large such effect the agency may optimally have to refrain from controlling mergers and instead spend all resources on fighting cartels.