Cartels

Agreements between firms raise different types of economic issues.

In the case of “hardcore” infringements such as price-fixing or customer allocation, the main question is the quantification of the price impact. Empirical research indeed shows that cartel overcharges vary a lot: some cartels fail to have any impact at all whereas some other cartels affect prices considerably.

Various quantitative techniques have been developed to estimate cartel overcharges. When addressing a cartel case, we identify which of them best suits the facts of the case and the available data.

However, these techniques cannot be applied independently of a careful, more qualitative analysis of the affected markets and the practices at stake, taking into account factors such as product differentiation, buyer power, demand elasticities, capacity constraints, or price wars. In particular, the first step of a quantitative analysis is the definition of a counterfactual that can be considered a relevant benchmark, against which actual market outcomes can be compared.

Practices other than outright cartels, such as some information exchanges or some agreements between producers and distributors, are addressed by most competition authorities under an effects-based approach. Their appraisal requires one to construct a 'theory of the case', often with reference to recent theoretical models. In doing so, we take care to ensure that theories are applied with enough attention given to the most minute details of the market context and the practices at stake.

We have experience dealing with cases involving practices such as

  • price fixing;

  • customer allocation;

  • resale price maintenance;

  • information exchanges;

  • exclusivity clauses;

  • the setting up of interchange fees in payment systems;

  • discussions on some pricing elements falling short of full price-fixing;

  • non-compete clauses.