Working Paper: CEPR ID: DP13327
Authors: Sven Heim; Kai Hueschelrath; Ulrich Laitenberger; Yossi Spiegel
Abstract: There is a growing concern that minority shareholding (MS) in rival firms may facilitate collusion. To examine this concern, we exploit the fact that leniency programs (LPs) are generally recognized as a shock that destabilizes collusive agreements and study the effect that the introduction of an LP has on horizontal MS acquisitions. Using data from 63 countries over the period 1990-2013, we find a large increase in horizontal MS acquisitions in the year in which an LP is introduced, especially in large rivals. The effect is present however only in countries with an effective antitrust enforcement and low levels of corruption and only when the acquisitions involve stakes of 10% - 20%. These results suggest that MS acquisitions may stabilize collusive agreements that were destabilized by the introduction of the LP.
Keywords: minority shareholdings; collusion; leniency programs; cartel stability
JEL Codes: G34; K21; L41
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| introduction of LPs (Y20) | increase in MSAs (R11) |
| LPs (L00) | destabilization of collusive agreements (K21) |
| effective antitrust enforcement and low corruption (K21) | increase in MSAs (R11) |
| introduction of LPs (in effective enforcement and low corruption) (P37) | increase in MSAs (R11) |
| introduction of LPs (in ineffective enforcement or high corruption) (P37) | no significant effect on MSAs (F69) |
| timing of LP introduction (Y20) | immediate increase in MSAs (H79) |
| LPs (L00) | MSAs to stabilize collusion (L12) |
| introduction of LPs (Y20) | increase in stakes of 10% to 25% (C73) |
| LPs (L00) | no significant effects for non-horizontal or cross-border MSAs (F69) |