Financial Performance Metrics in Cartelized Markets: A Look Into Automotive Retail

Abstract The study of cartel effects has traditionally focused on their impact on consumer prices within the framework of competition theories. Although it is well established that cartels tend to raise prices—often resulting in fines amounting to approximately 10 percent of company profits—the literature offers limited evidence on the actual financial benefits accrued by cartel participants. This article contributes to filling this gap by examining the financial performance of firms in the automotive retail sector during a period of cartelization. Particular attention is given to how these practices manifested during a severe economic crisis, which may have shaped both firm behavior and market dynamics. The analysis focuses on the study of “umbrella effects” induced by the automobile cartel sanctioned by the Spanish National Markets and Competition Commission (CNMC) in 2015. Employing panel quantile regression, a methodological innovation, this article explores how the effects of the cartel differ across firms with varying levels of performance. The findings reveal significant heterogeneity: firms with better financial performance derive more substantial financial benefits from the existence of the cartel, whereas financially weaker firms are particularly adversely affected. These results offer new insights into the financial dynamics of cartelized markets and carry important implications for competition policy.