Coordinated effects in merger analysis

Stack of books on a table

Economists use the term “collusion” to describe both explicit price-fixing and tacit collusion. To economists, the common defining characteristic of collusion is that these market outcomes result from suppliers’ mutual accommodation, usually sustained by repeated interactions. While not minimizing the important role that direct communication between suppliers can play in facilitating collusion, economists tend to focus their attention on requirements that are common to both explicit and tacit collusion. Foremost among these are the tasks of reaching, monitoring, and defending (with punishment tactics) a pricing consensus. Conduct that falls outside the scope of collusion may nonetheless still involve some form of coordinated interaction among competitors. Economists sometimes use the phrase parallel accommodating conduct to define situations involving “one firm raising price in the hope that other firms will accommodate the price increase by following it” even if there is no “prior agreement about the coordinated interaction or desired equilibrium.

This updated chapter appears in the 2023 edition of Antitrust Economics for Lawyers. For more information, click here.