Corona Crisis Cartels: Sense and Sensibility

19 Pages Posted: 12 Jun 2020 Last revised: 25 Jun 2020

See all articles by Maarten Pieter Schinkel

Maarten Pieter Schinkel

University of Amsterdam - Department of Economics; Tinbergen Institute

Abel d'Ailly

University of Amsterdam

Date Written: June 9, 2020

Abstract

Western competition authorities responded quickly and unanimously to the COVID-19 pandemic with a generous exemption from cartel law for any companies that aim to solve pressing scarcities through collaborations that restrict competition. However there is little reason to expect more supply, fair distribution, or wider use of personal protective equipment faster or at all from anticompetitive horizontal agreements. Traditional crisis cartels are about reducing excess supply, not excess demand. Embracing the policy may well have been about public image, rather than high expectations of collaboration amongst rivals contributing to solving the needs associated with COVID-19. This remarkable field experiment is not without side effects. By relaxing the first article of antitrust, the agencies undermined their own authority, just when we need them to effectively control the many markets that are rapidly consolidating as a result of the lockdowns and asymmetric state aids. The agencies should have stood by competition instead. On the other hand, this case could become a rich source of learning about the effectiveness of public interest cartels.

Keywords: cartel, COVID-19; health, short supply, public image

JEL Classification: H42; L41; K21

Suggested Citation

Schinkel, Maarten Pieter and d'Ailly, Abel, Corona Crisis Cartels: Sense and Sensibility (June 9, 2020). Amsterdam Law School Research Paper No. 2020-31, Amsterdam Center for Law & Economics Working Paper No. 2020-03, Available at SSRN: https://ssrn.com/abstract=3623154 or http://dx.doi.org/10.2139/ssrn.3623154

Maarten Pieter Schinkel (Contact Author)

University of Amsterdam - Department of Economics ( email )

Roetersstraat 11
1018 WB Amsterdam
Netherlands
+31 20 525 7132 (Phone)
+31 20 525 5318 (Fax)

Tinbergen Institute ( email )

Gustav Mahlerplein 117
Amsterdam, 1082 MS
Netherlands

Abel D'Ailly

University of Amsterdam ( email )

Spui 21
Amsterdam
Netherlands

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