Empirical methodology for the evaluation of collusive behaviour in vertically-related markets: an application to the "yogurt cartel" in France

The paper proposes a five-step methodology based on the estimation of demand and supply models to test theexistence of manufacturers’ collusive behaviour and evaluate its impact on market and welfare. This methodologyallows for the estimation of profit sharing in vertical chains by properly modelling the contracting stage betweenmanufacturers and retailers. We apply this methodology to analyse the effects of the "yogurt cartel" that prevailedin the French dairy dessert market between private label providers during the period 2006-2012. We find that datasupports collusive behaviour between private label manufacturers, and lead to average price increase varying from7.3% and 11.3%, according to the product category. We found an umbrella effect on dairy products sold undernational brands at the wholesale level but not at the retail level. The cartel benefits manufacturers both for thesales of the national brand and private label products, while retailers lost profits over the private label products butgained profits over the national brand products. The cartel implies a relatively low decrease in consumer welfare—lower than the gain for the industry—such that the overall welfare effect of the cartel is positive