International Cartel Enforcement: Lessons from the 1990s

Abstract

ABSTRACT:The enforcement record of the 1990s has demonstrated that private international cartels are neither relics of the past nor do they always fall quickly under the weight of their own incentive problems. Of a sample of forty such cartels prosecuted by the United States and European Union in the 1990s, twenty-four lasted at least four years. And for the twenty cartels in this sample where sales data are available, the annual worldwide turnover in the affected products exceeded US$30billion. Prevailing national competition policies are oriented towards addressing harm done in domestic markets, and in some cases merely prohibit cartels without taking strong enforcement measures. In this paper we propose a series of reforms to national policies and steps to enhance international cooperation that will strengthen the deterrents against international cartelization. Furthermore, aggressive prosecution of cartels must be complemented by vigilance in other areas of competition policy. If not, firms will respond to the enhanced deterrents to cartelization by merging or by taking other measures that lessen competitive pressures.

An empirical study of the European corporate leniency program

“…However, more than a third of this amount was reduced because firms cooperated with the Commission. Average duration of cartels was within a similar range as of cartels investigated in previous studies (Posner 1970, Evenett, Levenstein and Suslow 2001, Jacquemin, Nambu and Dewez 1981 8 . However, cartels witnessed a one year shorter duration after establishing the leniency program.…”

“…In the beginning of the 1990s, barriers of trade and investment were lowered between national markets within the European Union. Evenett, Levenstein and Suslow (2001) argue that this gave rise to the establishment of new EU wide cartels. Since the average duration of a cartel is about six to seven years, the rise of convicted cartels may just coincide with the "natural" break-down of this wave of new cartels.…”

“…However, another possible explanation of this fact is that these are not necessarily cartels which break down because of the destabilizing effect of the EU leniency program but because cartels were prosecuted in other jurisdictions. Antitrust enforcement across jurisdictions differs with the US having a more stringent regime which includes individual penalties for managers personally involved in criminal activities (Evenett, Levenstein and Suslow 2001).…”

Creating clubs and giants: How competition policies influenced the strategy and structure of Nordic pulp and paper industry, 1970–2000

“…13 From the late 1950s onwards, they officially abandoned banned forms of cooperation; however, since the 1990s, competition authorities had uncovered several illegal contemporary alliances. 14 Informal cooperation, trust and tacit collusion are well-known concepts in cartel research and we shall be able to benefit from some earlier theoretical insights. For example, Christopher R. Leslie has argued that 'trust is the glue that binds couples, communities and countries' and that without it 'many cartels will collapse under the weight of distrust, anticipated defections, and actual defections.…”

Mergers after Cartels: How Markets React to Cartel Breakdown

“…2002) on this provides more indirect evidence that prohibition of cartels preceded a major restructuring in parts of the UK economy. The main implication for policy makers was highlighted by Evenett et al (2001Evenett et al ( , pp.1245: "(V)igilance should not end with a cartels' punishment, as former price-…xers often try to e¤ectively restore the status quo ante by merging or by taking other steps that lessen competitive pressures and raise prices. "…”