Collusion in the Brazilian steel sector: A new industrial economy approach

Abstract

The Brazilian Law of Competition Defense does not have a special system of collusion proofs to be adopted by the Antitrust Authority. The usual procedure consists in analyzing the structure and conduct characteristics of anticompetitive actions. Nevertheless, this method presents remarkable restrictions, such as the supposition of a causal relationship between structure, conduct and performance variables. The objective of this paper is to present a complementary methodological instrument for the detection of collusion that can contribute towards obtaining indirect evidence. For this purpose, we apply the results of a model of strategic choices of capacity in a Brazilian steel segment, recently condemned by collusion. The test shows that it is possible to proceed by using an auxiliary path that verifies collusive results and not only those related to market power, even when the information about the firms are difficult to obtain.