theory. Furthermore the factors indicate that the cartel could have been anticipated by the Commission. In the examination of which structural factors facilitates collusion, the answers on many factors were slightly ambiguous, however they due provide an indication of where collusion is likely to occur and can be used by the competition authorities to estimate in which industries collusion is likely to occur. Furthermore it is important to emphasise that the factors which facilitates collusion also have an effect on cartel stability, therefore these factors will also be taking into consideration in the next section. Lyt Læs fonetisk Ordbog - 3. Which factors affect cartel stability Present section examines the factors that can have an effect on the stability of a cartel. The different factors can be divided in two groups. The group contains those factors which are related to market structure. The second group contains those factors which are related to the cartels´ internal situation. Furthermore the leniency programs effect on cartel stability will be examined. Before continuing with the examination, some general remarks about the stability within the marine hoses cartel must be commented on. The marine hoses cartel contained three different periods. The first period from 1986-1997 can be characterised as stable. The second period from 1997-2000 can be characterised as instable and the period from 2000 until detection can again be characterised as stable. 3.1 factors in the market structure Cartel stability is contingent on a number of factors. Some of these factors – such as seller concentration, buyer concentration, fluctuation in demand – are inherent in the market structure, thus they cannot be influenced by the cartel
more products. Advantages in marketing and distribution refer to the pooling and streamlining, the ability to offer distributors a broader product line and the sharing of advertising cost. Research and development refers to substantial cost savings through knowledge-transfer and innovation. As can be seen from several efficiencies can be derived from cooperation and the competition law needs to take these into consideration. 5 Conclusion In present chapter the economic theory of collusion has been discussed in detail. It has been established that coordination, monitoring and punishment are necessary ingredients in achieving and sustaining collusion. That certain ingredients is necessary certain markets more prone to collusion than others, as coordination, monitoring and punishment becomes easier with certain factors at hand. The factors which facilitate collusion are seller concentration; number of firms; barriers to entry; symmetries in cost structure, products and market shares. Producer transparency has been found to be of extreme importance, as it enables firms to monitor the other´s behaviour, which is considered necessary to sustain collusion. Exchange of information is the main key to increase transparency, and is therefore considered extremely important. Cartel stability is contingent on a number of factors. There seems to be consensus in the literature about which factors affect stability albeit there seems to be a dispute on the effect of some of the factors. Leniency programs were found to have a destabilizing effect in cases where cartels were already facing instability. The theory on market power established why collusion can have a deleterious effect on welfare and that deadweight loss is not the only cost stemming from it. The cost of monopolizations must also be taken into consideration. The economic studies of cartels´ ability to increase prices established that many cartels did increase prices, however not all, which supports the fact that profit is not the only motive behind collusion. In contrast it was established that horizontal cooperation can also lead to efficiency gains. Part 3: Legal analysis of cartels In the previous part cartels were discussed from an economic perspective. First some general insights on collusion were provided, second the factors which are likely to facilitate collusion were
Roger J. Van den Berg and Peter D. Camesasca ”European competition law and economics – a comparative perspective” Erasmus University Rotterdam 2001 Stephen Martin, “Industrial economics – economic analysis and public policy”, Second edition, Prentice hall 1994 pp. 27-36