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The Impact of Dawn Raids, Cartel Decisions and Appeals on Stock Prices

Author

Listed:
  • Seppe Maes

    (Brussels Centre for Competition Policy of the Vrije Universiteit Brussel)

  • Caroline Buts

    (Brussels Centre for Competition Policy of the Vrije Universiteit Brussel)

  • Marc Jegers

    (Brussels Centre for Competition Policy of the Vrije Universiteit Brussel)

Abstract

Do antitrust investigations by the European Commission have a significant impact on the market value of affected companies? This paper examines the effects of 700 antitrust observations regarding dawn raids, Commission decisions and appeals to the General Court or the Court of Justice on the stock prices of the companies involved using an event study methodology. A dawn raid creates an abnormal return of − 1.72% and a Commission decision generates a long-lasting drop of 2.23%. An appeal has no effect if litigated in front of the General Court and a short-lived dip of 1.38% in case of a judgment by the Court of Justice. Longer cartel participation leads to a more substantial negative abnormal return. An important observation is that firms that were granted immunity from the fine do not record any notable effects in stock price, despite the relatively low explanatory power of the monetary value of the fine in the overall market capitalisation decline. We suggest that this could be explained by the signalling effect of the fine to the market, in that sense being more important than initially expected.

Suggested Citation

  • Seppe Maes & Caroline Buts & Marc Jegers, 2025. "The Impact of Dawn Raids, Cartel Decisions and Appeals on Stock Prices," Journal of Industry, Competition and Trade, Springer, vol. 25(1), pages 1-25, December.
    • Handle: RePEc:kap:jincot:v:25:y:2025:i:1:d:10.1007_s10842-024-00432-7
    DOI: 10.1007/s10842-024-00432-7
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    More about this item

    Keywords

    Antitrust; Cartel; Competition policy; Event study;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • L44 - Industrial Organization - - Antitrust Issues and Policies - - - Antitrust Policy and Public Enterprise, Nonprofit Institutions, and Professional Organizations

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