Recent Advances in the Analysis of Competition Policy and Regulation
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Recent Advances in the Analysis of Competition Policy and Regulation

Edited by Joseph E. Harrington Jr and Yannis Katsoulacos

Bringing scholars and policymakers to the frontiers of research and addressing the critical issues of the day, the book presents original important new theoretical and empirical results. The distinguished contributors include: P. Agrel, K. Alexander, J. Crémer, X. Dassiou, G. Deltas, F. Etro, L. Filistrucchi, P. Fotis, M. Gilli, J. Harrington Jr, T. Huertas, M. Ivaldi, B. Jullien, V. Marques, M. Peitz, Y. Spiegel, E. Tarrantino and G. Wood.
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Chapter 4: Testing for the Presence of a Maverick in the French Audit Industry

Marc Ivaldi, Sébastien Mitraille and Catherine Muller

Extract

4. Testing for the presence of a maverick in the French audit industry Marc Ivaldi, Sébastien Mitraille and Catherine Muller1 4.1 INTRODUCTION Competition authorities in Europe and France are paying considerable attention to the risks of collective dominance when assessing the economic effects of a merger. A particular focus is on the operations that change the nature of competition or reinforce anti-competitive practices: indeed, the post-merger structure of an industry may offer new opportunities of coordinated behaviour amongst rival companies that were absent in the ante-merger situation;2 the post-merger structure may also increase the incentives or facilitate tacit collusion of companies that already coordinated.3 To assess the risks of collective dominance, competition authorities in Europe refer to the case law of the European Court of Justice: in the decision Airtours v. Commission of 6 June 2002,4 the Court of First Instance of the European Communities (CFI) defined three cumulative conditions that are required to establish that a merger can potentially lead to collective dominance. First, the market must be transparent enough so that dominant companies can monitor the aggressiveness of their rivals. Second, dominant companies must be able to retaliate and punish the aggressiveness of a rival, if this firm decides to cheat on a tacit agreement by being more aggressive on the market. Finally, no competitor, no entrant or no client should be able to win market share over competitors engaged in a tacit agreement by undercutting them. This last condition requires the absence of a...

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