Fight Cartels or Control Mergers? On the Optimal Allocation of Enforcement Efforts within Competition Policy

This paper deals with the optimal enforcement of the competition law in terms of merger control and anti-cartel policies. We examine the interaction between these two branches of the competition policy given the amount of resources available to the competition agency and taking into account the ensuing incentives for firms ’ behavior in terms of choice between cartels and mergers. We are thus able to draw conclusions on the optimal allocation of enforcement effort and resources between controlling mergers and fighting cartels, so as to infer their optimal competition policy mix. We show for instance that to the extent that firms switch from cartel to merger depending on the current focus of the competition law enforcement, applying a stricter merger control to prevent anti-competitive mergers only pays if the cartel fighting policy is not too expensive