The Prevalence of Coordinated Effects Theories in UK and EC Merger Cases

Expert economist, Kirsten Edwards-Warren, authored an article for the latest edition of the Competition Policy International (CPI) Antitrust Chronicle, which focuses on the theme coordinated effects and related issues in tacit collusion.

In this article, Kirsten analyses UK and EC merger cases over the past ten years to assess the extent in which coordinated effects have played a role in the investigation. It finds that coordinated effects theories of harm are articulated in decisions infrequently; when they are investigated, they result in an adverse finding less often than other non-coordinated concerns; and even when there has been an adverse finding on coordinated effects it has almost never been pivotal to the remedies.

Introduction

The UK CMA, in its revised merger guidelines in 2021, stated that “Coordinated effects have been considered by the CMA relatively infrequently in the past. Some commentators have argued that enforcement in this area should be strengthened, based partly on evidence which, they suggest, demonstrates that coordination in concentrated markets is common and has the effect of restricting competition and raising prices, even when imperfect. As it has in recent cases, the CMA will consider seriously the impact of mergers in concentrated markets on the potential for firms to coordinate, including tacitly through the recognition of their interdependence and avoidance of competition.”

This article examines both UK and EC merger cases in the past ten years in which coordinated effects have played a material role in the investigation. I find that:

theories of harm regarding coordinated effects have been rare – both in cases assessed by the CMA (consistent with its view quoted above) and by the EC;

even when there are coordinated effects theories of harm articulated, they result in an adverse finding and remedy far less often than other theories of harm; and

when there has been an adverse finding on coordinated effects, it has almost never been pivotal to the remedies that either authority has required.

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This paper was originally published for Competition Policy International here. The views expressed are those of the authors only and do not necessarily represent the views of Compass Lexecon, its management, its subsidiaries, its affiliates, its employees, or clients.