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33 Eur. J.L. & Econ. 1 (2012)

handle is hein.journals/eurjlwec33 and id is 1 raw text is: Eur J Law Econ (2012) 33:1-22 DOI 10.1007/s10657-010-9184-9 Preventing innovative cooperations: the legal exemptions unintended side effect Christian Growitsch - Nicole Nulsch Margarethe Rammerstorfer Published online: 6 October 2010 © Springer Science+Business Media, LLC 2010 Abstract In 2004, European competition law had been considerable changed by the introduction of the new Council Regulation No. 1/2003. One of the major renewals was the replacement of the centralized notification system for inter- company cooperations in favor of a so-called legal exemption system. We analyze the implications of this reform and its arising uncertainty on the agreements firms implement, especially on innovative agreements like vertical R&D agreements. By means of a decision theoretic approach, we show that the law's intention to reduce the incentive to establish illegal cartels will be reached but innovating cooperations might be prevented. To avoid this unintended side effect, fines but not the monitoring activities should be increased. Keywords Competition policy - Competition law enforcement - Legal exemption system JEL-classification K42 - L40 C. Growitsch University of Cologne and Martin Luther University Halle-Wittenberg, Vogelsanger Str. 321, 05827 Cologne, Germany e-mail: christian.growitsch@uni-koeln.de N. Nulsch Halle Institute for Economic Research, Kleine Mtrkerstr. 8, 06108 Halle/Saale, Germany e-mail: Nicole.Nulsch@iwh-halle.de M. Rammerstorfer (E) Institute for Finance, Banking and Insurance, Vienna University of Economics and Business, HeiligenstidterstraBe 46-48, 1190 Wien, Austria e-mail: margarethe.rammerstorfer@wu.ac.at I_ Springer