Private International Cartels: Effectiveness, Welfare, and Anticartel Enforcement
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.
|Date of creation:||2003|
|Date of revision:|
|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
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Hughes, James W. & Barbezat, Daniel P., 1996. "Basing-Point Pricing and the Stahlwerksverband: An Examination of the “New Competitive School”," The Journal of Economic History, Cambridge University Press, vol. 56(01), pages 215-222, March.
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 references are entirely missing, you can add them using this form.