Exploring National Concerted Practices in an Open Small Economy: What Does the Change in the Competition Law in the Netherlands Reveal?

CentER Discussion Paper Series No. 2011-037

61 Pages Posted: 10 Apr 2011 Last revised: 20 Apr 2011

Fatih Cemil Ozbugday

Ankara Yildirim Beyazit University - Department of Economics

Date Written: March 30, 2011

Abstract

The present study examines the impact of several industry characteristics on the propensity to collude using a dataset on the existence of collusion across Dutch industries during the late 1990s and early 2000s. The results of the Probit model with sample selection indicate that our sample of Dutch concerted practices is non-random in the sense that it only consists of anti-competitive agreements that were subject of an antitrust immunity behavior. Our bivariate probit model with sample selection indicates that concerted practices are less likely to be seen in service industries relative to manufacturing industries. The results also show that it is more likely that firms engaged in concerted practices in unconcentrated industries. Furthermore, we could not find a non-linear relationship between concentration and the presence of collusion. There is also strong evidence from all the regressions that concerted practices are less likely in industries where entry is more possible. Interestingly, our estimation results indicate that there is a positive correlation between cartel prevalence and import penetration, which implies that import competition did not discipline firm behavior and foreign importers joined the cartel paradise in the Netherlands. As to the role of measures of asymmetry on concerted practice prevalence, the association between patenting activity and propensity to engage in collusion is ambiguous in the current setting, while advertising intensity, as the second measure of asymmetry, is associated with increased likelihood of collusion. Contrary to the previous empirical findings, market growth has been found to have a negative effect on the probability of a concerted practice in an industry. Furthermore, our proposition that growing demand might attract new entrants, which, in turn, hampers collusion, has been falsified in the current context.

Keywords: Cartels, Competition law, Overt collusion, Probit model with sample selection, the Netherlands

JEL Classification: K21, L41

Suggested Citation

Ozbugday, Fatih Cemil, Exploring National Concerted Practices in an Open Small Economy: What Does the Change in the Competition Law in the Netherlands Reveal? (March 30, 2011). CentER Discussion Paper Series No. 2011-037. Available at SSRN: https://ssrn.com/abstract=1799336 or http://dx.doi.org/10.2139/ssrn.1799336

Fatih Cemil Ozbugday (Contact Author)

Ankara Yildirim Beyazit University - Department of Economics ( email )

Cicek St. No 1 Ulus
Ankara, 06500
Turkey

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