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Antitrust Decisions as a Sledgehammer?

A Descriptive Study on the Impact of Cartel Investigations on Stock Prices

Seppe Maes, Caroline Buts


Keywords: antitrust, cartel investigation, impact assessment, stock market performance

Companies under investigation for anticompetitive behaviour in breach of the competition rules face heavy fines, high legal costs, loss of future profits and reputational damage. In addition, listed companies also seem to (temporarily) experience negative shocks in their stock market value. This article provides a descriptive analysis of the impact of the European Commission’s press release, announcing an antitrust investigation, on the stock market performance of the companies involved. Furthermore, we discuss the influence of the press release covering the Commission’s decision and accompanying fine. Reviewing four cases for each of these two moments, we conclude that an antitrust investigation or fine can be linked to a substantial negative shock to the stock market value of the companies concerned. While the drop is sizeable and thus clearly visible for almost all companies, the effect also seems to be relatively short-lived. Interestingly, the effects mostly seem more pronounced for the announcement of the investigation than for the fine, with some cases barely showing an effect of the latter. This could indicate that the stock market already accounts for the full effects around the time of the initial announcement.
Keywords: antitrust; cartel investigation; impact assessment; stock market performance

Seppe Maes is a PhD student at the Department of Applied Economics of the Vrije Universiteit Brussel. Caroline Buts is a professor at the Department of Applied Economics of the Vrije Universiteit Brussel.


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