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Discovering Cartels: Uncovering Dynamic Interrelationships Between Criminal and Civil Antitrust Investigations

49 Pages Posted: 7 Feb 2007  

Vivek Ghosal

Rensselaer Polytechnic Institute; Center for Economic Studies and Ifo Institute for Economic Research (CESifo)

Date Written: December 2006

Abstract

This paper focuses on the genesis, taxonomy and timeline of U.S. criminal antitrust investigations, and uses time-series data on enforcement to examine the interrelationships between the various criminal enforcement variables as well as the linkages between criminal and civil enforcement. The key findings are: (1) there appears to be considerable dynamic interplay between the criminal variables. For example, an increase in grand jury investigations or criminal cases initiated or the number of individuals or firms convicted generates increases in most of these (endogenous) variables in future periods. A broad conclusion that can be drawn is that information unearthed during a given criminal investigation and prosecution often reveals information about other conspiracies leading to future investigations and prosecutions; (2) an increase in civil enforcement leads to future increases in the criminal cases and firms and individuals convicted. This suggests that information gleaned during civil investigations, such as mergers or monopolization cases, may reveal information about collusive behavior in markets leading to criminal investigations and prosecutions; and (3) criminal enforcement follows a counter-cyclical pattern with the number of criminal cases prosecuted increasing following an economic downturn. We relate this to the literature which points to cartel instability during economic downturns. Overall, our results point to complementarities in the investigative process within different facets of criminal investigations as well as between criminal and civil investigations.

Keywords: Cartels, Antitrust Enforcement, Prosecution, Business Cycles

JEL Classification: L40, L00, K21

Suggested Citation

Ghosal, Vivek, Discovering Cartels: Uncovering Dynamic Interrelationships Between Criminal and Civil Antitrust Investigations (December 2006). Available at SSRN: https://ssrn.com/abstract=961415 or http://dx.doi.org/10.2139/ssrn.961415

Vivek Ghosal (Contact Author)

Rensselaer Polytechnic Institute ( email )

110 8th Street
Troy, NY 12180
United States
518-276-3868 (Phone)

HOME PAGE: http://www.economics.rpi.edu/pl/people/ghosal

Center for Economic Studies and Ifo Institute for Economic Research (CESifo)

Poschinger Str. 5
Munich
Germany

HOME PAGE: http://www.cesifo.de

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