LAW & ECONOMICS: CARTEL ECONOMETRICS - CONSUMER WELFARE - PUBLIC PRICE ANNOUNCEMENTS - PRICE DISPERSION - BIDS - TENDERS - COLLUSION - NORMAL COMPETITIVE INTERACTION - AVAILABLE EVIDENCE - ECONOMIC EVIDENCE

What can be learnt from econometric studies in cartel cases?

Cartel econometrics has become a well-developed field of research that can contribute to the efficient implementation of competition policy. Beyond the most traditional type of analysis aiming to quantify the impact of cartels on consumer welfare, other methods have been developed lately. They allow economists to check whether the observed behaviour (in terms of public price announcements, price dispersion, or bids in response to tenders) is more likely to have been caused by collusion or by normal competitive interaction. This can facilitate the delineation of the periods effectively affected by coordination, as well as the interpretation of the available evidence when there is no obvious smoking gun. All these methods require great caution in order for their results to be robust and convincing. The currently ongoing effort by competition authorities’ economists to define best practices for the submission of economic evidence should make the use of econometric techniques more efficient.

1. Empirical analyses addressing the effects of cartels often arouse scepticism. Two main criticisms are generally leveled at them. First, some argue that these analyses are simply useless: cartels are per se illegal and must be severely punished since they are, by nature, harmful to consumers. According to this view, there is no room for complicated analyses of actual effects. Second, these analyses often raise complex methodological issues. They sometimes make their interpretation difficult, especially in the presence of conflicting submissions. 2.The point of this paper is that such scepticism is unwarranted in the light of the latest developments in cartel econometrics. The traditional approach to cartels is to attempt to quantify their impact on price levels. While many recent

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David Spector, Antoine Chapsal, What can be learnt from econometric studies in cartel cases?, February 2009, Concurrences Review N° 1-2009, Art. N° 23334, pp. 42-45

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