Econometric Analysis of the Decisions of the German Cartel Office
38 Pages Posted: 10 Sep 2002
Date Written: January 2002
In economic theory there is invariably a credible defence for all corporate competition practices. For the most part, the effects on static and dynamic competition functions cannot be uniquely identified. This places economic policymakers before the scope of discretion and responsible decision makers have to weigh the possible positive and negative consequences of horizontal and vertical strategies. It also raises the question, how far economic theory influences the decisions of cartel authorities. This paper surveys the decisions of the German Federal Cartel Office on abusive practices and cartels. It focuses mainly on to what extent the decisions can be explained through knowledge of anti-competitive practice and observable market structure features. The intention is to draw conclusions about the competition model used as a policy guideline in German Competition Law. The presented data was collected from the proceeding files of the German Cartel Office. The regression analysis includes 196 cases in the field of abusive practices and cartels between 1985-2000. An important finding of the paper is that, besides type of anticompetitive conduct, concentrations measures and an involvement of the market leader have a significant and robust effect on the decisions of the Cartel Office. The mechanistic method of explanation shows a reasonably high success rate of 75.69%.
Keywords: German Cartel Office, microeconometrics, competition policy
JEL Classification: L40, L49
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