DOES DEREGULATION ENCOURAGE ANTICOMPETITIVE BEHAVIOR

Abstract

This article aims to find empirical evidence of the connection between industrial deregulation and the appearance of anticompetitive practices. We test our hypothesis using data on antitrust proceedings in Spain from 1990 to 2003, when the Spanish government undertook intense reforms in several industries. We construct a database of proceedings brought by the Court (Tribunal de Defensa de la Competencia) during that period. Our results show an increase in collusion and trust practices in deregulated industries during that period, which required the government to dedicate additional resources to antitrust policy. We also find that certain regulatory elements and industrial deregulation have positive effects on the number of antitrust proceedings. We also observe that sanctions may induce a learning effect in industries that causes industry participants to modify their behavior. Finally, we find that the existence of a regulatory agency in an industry has no significant effect on antitrust proceedings in that industry.