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Tacit Collusion, Firm Asymmetries and Numbers: Evidence from EC Merger Cases

CCP Working Paper No. 07-7

38 Pages Posted: 25 Apr 2007  

S. W. Davies

University of East Anglia (UEA)

Matt Olczak

University of East Anglia

Date Written: April 2007

Abstract

The purpose of this paper is to identify empirically the implicit structural model, especially the roles of size asymmetries and concentration, used by the European Commission to identify mergers with coordinated effects (i.e. collective dominance). Apart from its obvious policy-relevance, the paper is designed to shed empirical light on the conditions under which tacit collusion is most likely. We construct a database relating to 62 candidate mergers and find that, in the eyes of the Commission, tacit collusion in this context virtually never involves more than two firms and requires close symmetry in the market shares of the two firms.

Keywords: Tacit collusion, collective dominance, coordinated effects, European mergers, asymmetries

JEL Classification: L13, L41

Suggested Citation

Davies, S. W. and Olczak, Matt, Tacit Collusion, Firm Asymmetries and Numbers: Evidence from EC Merger Cases (April 2007). CCP Working Paper No. 07-7. Available at SSRN: https://ssrn.com/abstract=982531 or http://dx.doi.org/10.2139/ssrn.982531

Steve W. Davies (Contact Author)

University of East Anglia (UEA) ( email )

Norwich Research Park
Norwich, Norfolk NR4 7TJ
United Kingdom

Matt Olczak

University of East Anglia ( email )

Norwich Research Park
Norwich, Norfolk NR4 7TJ
United Kingdom

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