cGUPPI: Scoring Incentives to Engage in Parallel Accommodating Conduct
33 Pages Posted: 9 Aug 2015 Last revised: 19 Aug 2015
Date Written: August 14, 2015
We propose an index for scoring coordination incentives, which we call the “coordination GUPPI” or cGUPPI. While the cGUPPI can be applied to a wide range of coordinated effects concerns, it is particularly relevant for gauging concerns of parallel accommodating conduct (PAC), a concept that received due prominence in the 2010 U.S. Horizontal Merger Guidelines. PAC is a type of coordinated conduct whereby a firm raises price with the expectation — but without any prior agreement — that one or more other firms will follow and match the price increase. The cGUPPI is the highest uniform price increase that all the would-be coordinating firms would be willing to implement without side payments. A larger cGUPPI implies a more pronounced incentive and ability for firms to engage in coordinated price increases. The difference between the post- and pre-merger cGUPPI (i.e. the Delta cGUPPI) is a practical way to score the effect of a merger on coordinated effects concerns.
Keywords: antitrust, merger, coordinated effects, collusion, incentives, GUPPI
JEL Classification: K20, K21, K29, L40
Suggested Citation: Suggested Citation