Kai Hüschelrath

Cartel Detection in Procurement Markets

Cartel detection is usually viewed as a key task of either competition authorities or compliance officials in firms with an elevated risk of cartelization. We argue that customers of hard core cartels can have both incentives and possibilities to detect such agreements on their own initiative through the use of market-specific data sets. We apply a unique data set of about 340,000 market transactions from 36 smaller and larger customers of German cement producers and show that a price screen would have allowed particularly larger customers to detect the upstream cement cartel before the competition authority. The results not only suggest that monitoring procurement markets through screening tools has the potential of substantial cost reductions - thereby improving the competitive position of the respective user firms - but also allow the conclusion that competition authorities should view customers of potentially cartelized industries as important allies in their endeavour to fight hard core cartels.

Airline Alliances, Antitrust Immunity and Market Foreclosure

This paper examines the issue of market foreclosure by airline partnerships with antitrust immunity. Overlapping the data on frequency of service and passenger volumes on nonstop routes on the transatlantic airline market with the information on dynamics of airline partnerships, we find evidence consistent with the airlines operating under antitrust immunity refusing to accept connecting passengers from the carriers outside of the partnership at respective hub airports. When an airline partnership is granted antitrust immunity, airlines outside this partnership end up reducing their traffic to the partner airlines’ hub airports by 2.6-8.5 percent (depending on the specification and estimation technique involved). Our results suggest ambiguous welfare effects of antitrust immunity on some markets, where previous studies indicated airline consolidation should benefit consumers.

Fighting hard core cartels

The paper provides a comprehensive survey of the economics behind the fight against hard core cartels. Differentiating between four subsequent stages – characterisation, welfare effects, enforcement and evaluation – the paper pays particular attention to cartel detection methods, the derivation of corporate fines, the quantification of private damages and possibilities to judge on the successfulness of cartel enforcement activities by competition authorities around the world.

Deregulation, Competition, and Consolidation: The Case of the German Interurban Bus Industry

We provide an empirical assessment of the German interurban bus industry two years after its deregulation in January 2013. In addition to a general description of key developments of the industry, we use a unique route-level price data set to study both competitive interaction in general and the potential price effects of a recently announced merger of the two largest players in the market in particular. We find that route-level average prices, inter alia, do not only depend on the number of competitors but especially on the composition of firms operating on a particular route. Although our empirical results suggest short-term price increases on certain route types post-merger, it remains an open question whether the merger should be classified as anticompetitive.

Airline Networks, Mergers, and Consumer Welfare

We study the consumer welfare effects of mergers in airline networks. Based on the development of a general classification of affected routes, we apply a difference-in-differences approach to exemplarily investigate the price effects of the America West Airlines - US Airways merger completed in 2005. We find that although average prices increased substantially on routes in which both airlines competed either on a non-stop or one-stop basis prior to the merger, substantial average price reductions observed for routes without any pre-merger overlap suggest that the merger led to a net increase in consumer welfare.

Public and Private Enforcement of Competition Law - A Differentiated Approach

We investigate the relationship between public and private enforcers introducing a more differentiated approach. In contrast to the existing literature, we take into account that the costs and benefits of detection and prosecution and, thus, the usefulness of each enforcement mode may change with a variation of the type of anticompetitive conduct. We define a set of parameters that determine the costs and benefits of both types to enforce the antitrust laws and discuss implications for European competition law and policy.

Existing and new evidence on the effects of airline hubs.

We review evidence on airline hubs and supplement existing literature by our own data. We start with an outline of how hubs can be classified, followed by an analysis of the drivers of the importance of hubs to airlines and an investigation of whether regions differ in the intensity of hubbing. Subsequently, we review empirical studies that deal with the location of hubs and with the effects that hubs have on the hub operator, passengers and competition. Finally, we outline questions not yet answered by evidence and discuss the future of hubs. jel Classification: L 93

The Deterrent Effect of Antitrust Sanctions: Evidence from Switzerland

With the effectiveness of the revision of the Swiss Cartel Act on April 1, 2004, the Competition Commission (the COMCO) gained considerable new powers, especially the power to sanction anticompetitive behavior by imposing substantial fines. Additionally, the revision provided the COMCO with enhanced means of gathering evidence of competition law infringements by conducting dawn raids, thereby increasing the probability of detection and punishment for competition law infringements. Both steps together aimed at strengthening the deterrent effect of antitrust sanctions. Against this background, the article investigates to what extent the revision has reached its goal by conducting a survey among Swiss antitrust lawyers and firms. The results show that the revision certainly has strengthened the deterrent effect of antitrust sanctions in Switzerland. However, in some areas, greater specificity of the legal provisions is advisable in order to increase legal certainty and to avoid negative effects on social welfare by deterring procompetitive behavior.

Determinants of the duration of European appellate court proceedings in cartel cases

The duration of appellate court proceedings is an important determinant of the efficiency of a court system. We use data of 263 appeals decisions referring to 54 cartels convicted by the European Commission between 2000 and 2012 to investigate the determinants of the duration of the subsequent one- or two-stage appeals process. We find that while the speed of first-stage appellate court decisions depend, inter alia, on authority-related factors such as the complexity of the case, the clarity of the applied rules and regulations and previous or simultaneous US investigations, the second-stage appellate court proceedings appear to be largely unaffected by those drivers.

Cartel Enforcement in the European Union: Determinants of the Duration of Investigations

We provide an empirical assessment of EC cartel enforcement decisions between 2000 and 2011. Following an initial characterisation of our dataset, we especially investigate the determinants of the duration of cartel investigations. We are able to identify several key drivers of investigation length such as the Commissions speed of cartel detection, the type of cartel agreement, the affected industry or the existence of a chief witness.