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Cartel Detection in Procurement Markets

35 Pages Posted: 12 Jan 2012  

Kai Hüschelrath

Centre for European Economic Research (ZEW)

Tobias Veith

Centre for European Economic Research (ZEW)

Date Written: December 1, 2011

Abstract

Cartel detection is usually viewed as a key task of either competition authorities or compliance officials in firms with an elevated risk of cartelization. We argue that customers of hard core cartels can have both incentives and possibilities to detect such agreements on their own initiative through the use of market-specific data sets. We apply a unique data set of about 340,000 market transactions from 36 smaller and larger customers of German cement producers and show that a price screen would have allowed particularly larger customers to detect the upstream cement cartel before the competition authority. The results not only suggest that monitoring procurement markets through screening tools has the potential of substantial cost reductions – thereby improving the competitive position of the respective user firms – but also allow the conclusion that competition authorities should view customers of potentially cartelized industries as important allies in their endeavor to fight hard core cartels.

Keywords: Business economics, procurement, antitrust policy, cartels, detection, screening

JEL Classification: D24, L41, L61, M11, M21, K21

Suggested Citation

Hüschelrath, Kai and Veith, Tobias, Cartel Detection in Procurement Markets (December 1, 2011). ZEW - Centre for European Economic Research Discussion Paper No. 11-066. Available at SSRN: https://ssrn.com/abstract=1983280 or http://dx.doi.org/10.2139/ssrn.1983280

Kai Hüschelrath (Contact Author)

Centre for European Economic Research (ZEW)

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

Tobias Veith

Centre for European Economic Research (ZEW) ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

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