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Fight Cartels or Control Mergers? On the Optimal Allocation of Enforcement Efforts within Competition Policy

By  |  October 13, 2014

Posted by Social Science Research Network

Fight Cartels or Control Mergers? On the Optimal Allocation of Enforcement Efforts within Competition Policy – Andreea Cosnita-Langlais (Université Paris Ouest – Nanterre, La Défense – EconomiX) and Jean-Philippe Tropeano (Université Paris I Panthéon-Sorbonne – Maison des Sciences Economiques)

ABSTRACT: This paper deals with the optimal enforcement of competition law between merger and anti-cartel policies. We examine the interaction between these two branches of antitrust, given the budget constraint of the public agency, and taking into account the ensuing incentives for firms in terms of choice between cartels and mergers. To the extent that a tougher anti-cartel action triggers more mergers and vice versa, we show that the two antitrust branches are complementary. However, if the merger’s coordinated effect is taken into account, then for a sufficiently large such effect the agency may optimally have to refrain from controlling mergers and instead spend all resources on fighting cartels.