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Collusion in Markets Characterized by One Large Buyer: Lessons Learned from an Antitrust Case in Russia

18 Pages Posted: 7 Feb 2014  

Andrey E Shastitko

Lomonossov Moscow State University; Russian Presidential Academy of National Economy and Public Administration (RANEPA)

Svetlana Golovanova

National Research University Higher School of Economics - Department of Economic Theory and Econometrics

Date Written: February 7, 2014

Abstract

This paper demonstrates that even established and verified facts of agreements among producers are not a sufficient condition for cartel identification and, as a consequence, prosecution of agreement participants. Such requires looking at institutional details and the wider context of these and similar appearances or occurrences of documents and actions when qualifying the actions of market participants and their effects. This paper discusses a recent antitrust case brought against Russian manufacturers of large diameter pipes (LDPs) that examined supposedly abusive practices by these firms that were contrary to the law on the Protection of Competition, which prohibits market division. The case under consideration illustrates the importance of investigating institutional details when qualifying the actions of market participants and their effects. An analysis of the materials in this case using modern economic theory indicates that the presence of collusion is inconsistent with the active participation of the main consumer of LDPs in that agreement. The chosen format for the cooperation between pipe manufacturing companies and OJSC Gazprom, namely indicative planning, may be explained from the perspective of reducing contract risk in an environment characterized by large-scale private investments.

Keywords: collusion, antitrust policy, credible commitments, indicative planning, contract risk

JEL Classification: K21, B52

Suggested Citation

Shastitko, Andrey E and Golovanova, Svetlana, Collusion in Markets Characterized by One Large Buyer: Lessons Learned from an Antitrust Case in Russia (February 7, 2014). Higher School of Economics Research Paper No. WP BRP 49/EC/2014. Available at SSRN: https://ssrn.com/abstract=2392222 or http://dx.doi.org/10.2139/ssrn.2392222

Andrey E Shastitko

Lomonossov Moscow State University ( email )

1-46 Leninskiye Gory
Moscow, 119991
Russia

Russian Presidential Academy of National Economy and Public Administration (RANEPA) ( email )

Vernadskogo Prospect 82
Moscow, Moscow 119571
Russia

Svetlana Golovanova (Contact Author)

National Research University Higher School of Economics - Department of Economic Theory and Econometrics ( email )

Shabolovka 26
Moscow, 119049
Russia

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