Regulatory contract usage in case of antitrust mergers and acquisitions control

The article provides an analysis of counterparties’ benefits and costs within the framework of regulatory contracts the object of which is structural prescriptions issued by the antimonopoly authority controlling mergers and acquisitions. The purpose of the study is to identify discrete institutional alternatives for creating credible commitments in regulatory contracts with the participation of the monitoring trustee (taking into account the risk of distorted incentives).The object of the study is the regulatory contract between the regulator, the trustee, and the company (merger participant) in the case of divestiture, since this situation is the most sensitive in terms of setting incentives and risks of opportunism. The subject of the study is credible commitments in such regulatory contracts. The analysis is based on methods of new institutional economics and of law and economics, and it employs mathematical modeling. The comparative analysis of discrete institutional alternatives is used as the main methodological approach, and it is based on an analysis of action coordination forms and harmonization of economic agents’ expectations — in this case, the antimonopoly agency, a trustee, and companies involved in mergers and acquisitions transactions. Advantages and disadvantages of the following contracting options were identified: independent monitoring by the regulator;monitoring with the involvement of a trustee whose activities are financed by the competition authority or the company; a hybrid approach financing trustee activities; distribution of income from penalties as a way for financing trustee activities; and a system of pledges in a tripartite contract. The article also defines the conditions for credible commitments within the framework of regulatory contracts. The results of this research can be used as a guideline for institutional design in the Russian antitrust enforcement system.