Encouraging the formation of joint research initiatives between private firms is a priority policy in many jurisdictions, including the US, Japan and the EU. Economies of scale in new knowledge creation and various other types of synergies induce research cooperatives to enhance the generation of new ideas and to increase the speed at which innovations reach final consumers. There is a cost to these benefits however: partners of a research cooperative are more likely to fix prices on the concomitant product market as they can freely discuss these prices under the umbrella of their ‘joint research’, a practice that is harmful for consumer welfare. For instance, in December 2012, seven electronic giants (including LG, Philips, Samsung, and Panasonic) were accused of fixing global prices, yielding the highest fine to date in the history of antitrust enforcement of the EU (no less than EUR 1.47 billion). Two of these companies (Philips and LG) had also been involved in a joint research venture.
In his thesis, Grega Smrkolj challenges the conventional view that price-fixing agreements by members of a research cooperative necessarily harm consumer welfare. His research work shows that cartels have larger incentives to engage in technological projects that call for high expenses in advance of production. Moreover, they bring new technologies to the market more quickly, and are more likely to continue investing in technologies that require considerable maintenance costs and that exhibit a low revenue potential. These results challenge the current stance of competition authorities, treating price-fixing agreements as illegal per se.