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

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

By Davies, S. & Olczak, M. with Coles, H.

This paper estimates the implicit model, especially the roles of size asymmetries and firm numbers, used by the European Commission to identify mergers with coordinated effects. This subset of cases offers an opportunity to shed empirical light on the conditions where a Competition Authority believes tacit collusion is most likely to arise. We find that, for the Commission, tacit collusion is a rare phenomenon, largely confined to markets of two, more or less symmetric, players. This is consistent with recent experimental literature, but contrasts with the facts on ‘hard-core’ collusion in which firm numbers and asymmetries are often much larger.