Mergers after cartels: How markets react to cartel breakdown

Stephen Davies, Peter Ormosi, Martin Graffenberger

Research output: Working paper

128 Citations (Scopus)
39 Downloads (Pure)


This paper examines whether cartel breakdown provokes a period of intensive merger activity amongst the former cartelists, designed to re-establish tacit collusion. Using a novel application of recurrent event survival analysis for a pooled sample of 84 European cartels, it finds that mergers are indeed more frequent post-cartel breakdown, especially in markets which are less concentrated. However, it cautions against merely assuming that these mergers are motivated by coordinated effects - alternatively, they may be the consequence of market restructuring, necessitated by more intense competition post-cartel. Further disaggregated analysis of the individual mergers show that on average these mergers are profitable for the acquiring company, and that the tacit collusion motive is likely to be at work for a large minority of the mergers.
Original languageEnglish
PublisherCentre for Competition Policy
Number of pages39
ISBN (Print)ISSN 1745-9648
Publication statusPublished - 2014

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