Edited by Joseph E. Harrington Jr and Yannis Katsoulacos
Chapter 6: Competition Policy and Firm’s Damages
6. Competition policy and firm’s damages Panagiotis N. Fotis1, 2 6.1 INTRODUCTION Antitrust policy aims at preventing companies from abusing market power, restraining free trade and/or forming anti-competitive agreements. Its objective is to foster competition in the interest of consumer welfare. Therefore, effective antitrust laws imposed by competition authorities are fundamental in competition policy as they prevent firms from distorting effective competition. Regulators can impose legal and regulatory penalties on firms that are caught infringing the competition law so as to dishearten them from engaging in cartels and other anti-competitive behaviour. Optimal antitrust policy demands the costs that firms incur when found guilty of antitrust infringement are high enough to make the infringement unprofitable. The financial sanction should exceed the expected profits from the anti-competitive activity in order to compensate for ineffective detection. Sanctions also may offer an incentive to cartel participants to deviate from the cartel and provide critical information to competition authorities to benefit from leniency. In this chapter, I carry out an econometric analysis to explore the effect of antitrust and abuse of dominant position investigations on the share value of firms that have infringed Greek competition law. I analyse a sample of major Greek antitrust and abuse of dominant position cases during the period from 2000 to 2010 and I evaluate the private damages imposed to the infringed firms. For this purpose I define the ‘Investigation period’, which begins from the outset of the investigation and ends when the competition authority issues its final decision to...
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