The Impacts of an Antitrust Investigation: A Case Study in Agriculture
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We analyze the impacts of an antitrust investigation on the purchasing practices of a buying collaboration and its common bidding agent. Using a repeated cross section of prices across procurement auctions that were and were not subjected to the investigation, we find that auction prices in the targeted auctions: (i) significantly increased as soon as the targets were made aware they were under investigation; (ii) remained higher as long as the investigation was open; and (iii) systematically declined to the same low pre-knowledge state after the closure of the investigation without prosecution. Finally, the counterfactual impact on auction prices by the removal of the common bidding agent and the demise of the buying collaboration at a later date was on par with the impacts of the investigation.
KeywordsAntitrust investigation Auction Buying collaboration Common bidding agent Collusion GIPSA
The authors thank the editor, Lawrence White, and two anonymous reviewers for their guidance and insightful comments. We also thank Kraig Roesch (GIPSA, Regional Director, Western Regional Office) for his legal and industry expertise; Mike Bourke and Dick Zuelke for lending their industry and auctioning expertise; Tracy Dowty, Tom Duggan, Kristin Corash, and Weylin Lucius for their assistance in conducting the original GIPSA investigation; and a special thanks to Melinda Meador, for pointing out the value of a ‘cop in the median’. Finally, we thank the USDA, Economics of Markets and Development Program, Agriculture and Food Research Initiative, National Institute of Food and Agriculture for funding the research. However, the conclusions, interpretations, and errors made in the article are the authors’ alone.
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