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The economic and legal antitrust literature qualifies facilitating practices as actions that foster collusion (Hovenkamp 1994, ch. 4; Church and Ware 2000 ch. 10). However, the exact scope of this definition depends on what we mean by" collusion." Unfortunately, this expression is often employed with different meanings by lawyers and economists, and even within the economic profession it is not always adopted consistently. In the legal literature, collusion mainly refers to a situation where firms coordinate their strategies through some form of concerted activity with the aim to restrict competition. Although a formal agreement is not strictly necessary, collusion requires some" meeting of the minds,"" mutual assent," or" concerted practice." In short, collusion identifies one of the conducts generally prohibited by antitrust law (Article 81 of the EC Treaty, Section 1 of the Sherman Act).

The economic notion of collusion contrasts with the legal notion, as it refers directly to the market outcome. Collusion occurs if prices are above those that would result with competitive conditions. ¹ This definition poses the problem of identifying the competitive benchmark. To this end, the outcome of a perfectly competitive market, marginal cost pricing, is inadequate, as it would probably lead to an overinclusive definition of collusion. Hence it is now prevalent in the economic literature to equate the competitive benchmark to the outcome of a static game (Phlipps 1995; Motta 2004). As a consequence collusion is considered a strategic phenomenon that rests fundamentally on a dynamic interaction. It arises only if firms are able to sustain higher prices by threatening to punish in …