The Role of Undertakings in Regulatory Decision-Making

Posted: 11 Jul 2000

See all articles by Teresa Fels

Teresa Fels

affiliation not provided to SSRN

Joshua S. Gans

University of Toronto - Rotman School of Management; NBER

Stephen P. King

Monash University - Department of Economics; Productivity Commission

Abstract

The Australian Competition and Consumer Commission (ACCC) has powers under the Trade Practices Act 1974 (Cwlth) to accept undertakings from industry participants interested in taking actions, such as mergers, that may potentially be anticompetitive. This paper analyses the role of undertakings, focusing on horizontal mergers. We demonstrate that undertakings can provide an imperfectly in-formed regulator with a credible signal of the positive social benefits of a proposed merger. In particular, if the merged parties undertake not to reduce their output following the merger, then the merger will only be proposed if it results in net social benefits. We discuss the practical issues of implementing a behavioural undertaking such as a minimum quantity commitment, and argue that these are no less difficult than other regulatory activities currently pursued by the ACCC.

JEL Classification: L51

Suggested Citation

Fels, Teresa and Gans, Joshua S. and King, Stephen Peter, The Role of Undertakings in Regulatory Decision-Making. Available at SSRN: https://ssrn.com/abstract=231631

Teresa Fels

affiliation not provided to SSRN

Joshua S. Gans (Contact Author)

University of Toronto - Rotman School of Management ( email )

Canada

HOME PAGE: http://www.joshuagans.com

NBER ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Stephen Peter King

Monash University - Department of Economics ( email )

23 Innovation Walk
Wellington Road
Clayton, Victoria 3800
Australia

Productivity Commission ( email )

Level 28
35 Collins St.
Melbourne, Victoria, Victoria 3000
Australia

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
837
PlumX Metrics