2014-07 Deterrence effects of Korean antitrust enforcement on producer prices and profit margins

Antitrust enforcement is by now well-established in Korea, yet there has been little study of its effectiveness. Connor (2008), however, noted that “the Korean FTC has the best record of anti-cartel enforcement in Asia” and Jeong and Masson (1990) found evidence of market structure impacts on industry performance in Korea. In this paper we examine several datasets to investigate whether antitrust enforcement in Korea, especially anti-cartel activity, has had desirable price-limiting impacts over the past couple of decades. We focus on two types of improper concerted actions, price fixing and big rigging. These are the main types of violation among Korean antitrust cases as seen in Table 1. We use panel data methods which allow us the opportunity to compare the behavior of firms and industries subjected to antitrust investigation to others and to examine the responses of these firms and industries themselves following the cases.