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Antitrust policy and price collusion : public agencies vs delegation

Published online by Cambridge University Press:  17 August 2016

Gianmaria Martini  and
Cinzia Rovesti
Gianmaria Martini
Affiliation:
Department of Management and Information Technology, University of Bergamo, Italy
Cinzia Rovesti
Affiliation:
Autorità Garante della Concorrenza e del Mercato, Roma, Italy
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Summary

This paper investigates the effectiveness of antitrust policy in fighting horizontal collusion under different regimes of policy implementation. We consider two regimes: a public agency regime, where an antitrust authority is in charge of competition policy, and a “delegation” regime, where the policy is chosen by consumers. In both regimes the policy is implemented under discretion. The analysis shows that delegation dominates, both in case of complete and imperfect information about production costs, the public agency regime because consumers credibly start off an higher level of investigation activity than the public agency. This result implies that the public agency will fight the cases involving “relevant” anti-competitive activities, while consumers will act also against “minor” violations. The combination of the two regimes yields an higher welfare than having only a public agency in charge of competition policy, because consumers can partially relax the agency's limited resources constraint.

Résumé

Résumé

Cet article étudie l'efficacité d'une politique antitrust combattant la collusion horizontale sous différents régimes de mise en oeuvre. Nous considérons deux régimes : un régime avec agence publique, où une authorité antitrust se charge de la politique de concurrence, et un régime de « délégation », où la politique est choisie par les consommateurs. Sous les deux régimes, la politique est mise en oeuvre à discrétion. L'analyse montre que la délégation domine l'agence publique, dans le cas d'une information complète comme imparfaite sur les coûts de production, parce que les consommateurs mettent en place une activité d'investigation d'un plus haut niveau. Ce résultat implique que l'agence publique va combattre des cas « importants » d'activités anti-concurrencielle, alors que les consommateurs vont aussi agir face à des cas plus « mineurs ». La combinaison des deux régimes mène à un meilleurs bien-être que si une agence publique seule est en charge de la politique concurrentielle, parce que les consommateurs peuvent partiellement relacher la contrainte des ressources limitées de l'agence.

Keywords

Politique antitrustcollusion horizontaledélégationrégimes de politiqueL41L51Antitrust policyhorizontal collusiondelegationpolicy regimesL41L51
Type
Research Article
Information
Recherches Économiques de Louvain/ Louvain Economic Review , Volume 70 , Issue 2 , 2004 , pp. 127 - 151
Copyright
Copyright © Université catholique de Louvain, Institut de recherches économiques et sociales 2004 

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Footnotes

*

We wish to thank John D. Hey and Claude d'Aspremont for helpful discussions. We also thank Paolo Buccirossi, Giuseppe Colangeio, Gianni De Fraja, Gianluca Femminis, Isabel Grilo and Gerd Weinrich for their comments. We have also greatly benefited from comments and suggestions provided by two anonymous referees. The usual disclaimer applies. The contents expressed in this paper are the authors' view on the issue analyzed and not that of the Italian Antitrust Authority. Correspondence to: G. Martini, Department of Management and Information Technology, University of Bergamo, viale Marconi 5, I-24044 Dalmine (BG), Italy. E-mail:gianmaria.martini@unibg.it

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