Advanced Search
MyIDEAS: Login to save this paper or follow this series

Private International Cartels: Effectiveness, Welfare, and Anticartel Enforcement

Contents:

Author Info

  • John M. Connor

    ()
    (Department of Agricultural Economics, College of Agriculture, Purdue University)

Abstract

This paper presents and analyses economic data on 167 international cartels that were discovered by antitrust authorities after January 1990. The median cartel had five corporate members and generated $1.2 billion in sales during the collusive period. Nearly 40% of affected sales occurred in the organic chemicals industries, half of which were sold to food, feed, and agricultural firms. On average, the cartels lasted nearly six years, but average durability declined by more than 60% from the early 1990s to the early 2000s. In the early 2000s more than 20 international cartels were discovered each year, a rate six times faster than the early 1990s. The large size and longevity of these cartels, when combined with average monopoly overcharges of 28%, cause a great deal of monetary harm to buyers. Discovered cartels have met with increasingly harsh sanctions since 1990. Government authorities have imposed a total of $7.1 billion in fines on 870 companies and 62 executives, of which the United States (27%) and European Union (51%) are the major governments responsible. Private antitrust suits resulted in settlements totaling at least $3.4 billion. Some 32 executives have been imprisoned. Statutory penalties, if imposed at maximum levels, would extract about 12 times cartel overcharges, a level sufficient to deter most firms from forming or joining a cartel. However, applying optimal deterrence concepts to the characteristics of modern international cartels allows one to deduce that current antitrust enforcement is inadequate to deter cartel formation. This conclusion follows from low probabilities of detection, overly generous leniency policies in finesetting, the absence of private suits outside North America, the inability of most indirect purchasers to recover damages, and generally weak anti-cartel enforcement in Asia and Latin America.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://ageconsearch.umn.edu/bitstream/28645/1/sp03-12.pdf
Download Restriction: no

Bibliographic Info

Paper provided by Purdue University, College of Agriculture, Department of Agricultural Economics in its series Working Papers with number 03-12.

as in new window
Length: 148 pages
Date of creation: 2003
Date of revision:
Handle: RePEc:pae:wpaper:03-12

Contact details of provider:
Postal: 1145 Krannert Building, West Lafayette, IN 47907-1145
Phone: 765 494-4191
Fax: 765 494-9176
Web page: http://www.agecon.purdue.edu/
More information through EDIRC

Related research

Keywords: cartels; antitrust; monopoly;

References

No references listed on IDEAS
You can help add them by filling out this form.

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Frederik Silbye, 2012. "A note on antitrust damages and leniency programs," European Journal of Law and Economics, Springer, vol. 33(3), pages 691-699, June.
  2. John M. Connor, 2004. "Global Antitrust Prosecutions of Modern International Cartels," Journal of Industry, Competition and Trade, Springer, vol. 4(3), pages 239-267, 09.
  3. John Connor, 2006. "Effectiveness of Antitrust Sanctions on Modern International Cartels," Journal of Industry, Competition and Trade, Springer, vol. 6(3), pages 195-223, December.
  4. John Connor & C. Gustav Helmers, 2006. "Statistics On Modern Private International Cartels, 1990-2005," Working Papers 06-11, Purdue University, College of Agriculture, Department of Agricultural Economics.
  5. Sovinsky, Michelle & Eric Helland, 2013. "Do Research Joint Ventures Serve a Collusive Function?," The Warwick Economics Research Paper Series (TWERPS) 1030, University of Warwick, Department of Economics.
  6. Jeroen Hinloopen & Adriaan Soetevent, 2006. "Trust and Recidivism; the Partial Success of Corporate Leniency Program in the Laboratory," Tinbergen Institute Discussion Papers 06-067/1, Tinbergen Institute.
  7. Buccirossi, Paolo & Spagnolo, Giancarlo, 2006. "Optimal Fines in the Era of Whistleblowers," CEPR Discussion Papers 5465, C.E.P.R. Discussion Papers.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:pae:wpaper:03-12. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Debby Weber).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.