Cartelization, Cartel Breakdown, and Price Behavior: Evidence from the German Cement Industry

Abstract

We use a unique dataset of about 340,000 market transactions from 36 smaller and larger customers of German cement producers to study the price behavior before and after the breakdown of a German cement cartel. We find that, first, while the cartel agreement was active, cartel members set higher list prices than non-cartel members; however, larger rebates granted by the cartel members led to similar transaction prices. Second, after the cartel breakdown, both cartel- and non-cartel members reduced transaction prices to a far larger extent than list prices. We build on these results and discuss implications for competition policy.