Mergers after cartels: How markets react to cartel breakdown

Stephen Davies, Peter L. Ormosi, Martin Graffenberger

Research output: Contribution to journalArticlepeer-review

8 Citations (Scopus)
17 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
Pages (from-to)561-283
Number of pages23
JournalThe Journal of Law and Economics
Issue number3
Publication statusPublished - Aug 2015

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