Subhasish Chowdhury - Anti-trust Enforcement under Avoidance - REBEW3 22.06.20
Channel: University of Reading Seminars
Date: 2020-06-25

Competition law offenders use a multitude of avoidance activities such as consulting with anti-trust experts, destroying or covering up of incriminating evidence, lobbying for favourable policy guidelines, restructuring of a firm’s finance - to reduce their potential anti-trust fines. This paper explores the effect of such activities on formation, activity and stability of cartels by means of a market experiment. We observe that avoidance has a significant impact on cartel formation, as firms are more willing to collude when they are able to insure themselves against their future fines through avoidance. Further, firms that engage in avoidance activities achieve higher collusive prices. Finally, our results suggest that some firms utilise avoidance procedures as an alternative means to leniency in an attempt to avoid being punished for price deviations.