Competition Law and Transnational Private Regulatory Regimes: Marking the Cartel Boundary
| Date | 01 March 2011 |
| Published date | 01 March 2011 |
| DOI | http://doi.org/10.1111/j.1467-6478.2011.00537.x |
| Author | Imelda Maher |
JOURNAL OF LAW AND SOCIETY
VOLUME 38, NUMBER 1, MARCH 2011
ISSN: 0263-323X, pp. 119±37
Competition Law and Transnational Private Regulatory
Regimes: Marking the Cartel Boundary
Imelda Maher*
Cartels today are prohibited under competition regimes around the
world, although seen historically (in Europe at least) as a public good
to be tolerated or even encouraged by governments. Despite the pro-
hibition, illegal cartels are still prevalent, and there are circumstances
where cartel-like conduct is allowed under competition rules. This
article explores the extent to which such conduct can be both subject to
one regulatory regime (competition law) while also carrying out
regulatory functions, and hence can be construed as transnational
private regulatory regimes (TPRERs). There are three categories of
cartel-like arrangements: private contractual arrangements that fall
outside the realm of competition law; self-regulatory arrangements
designed to exclusively advance the interests of regulatees; and hybrid
regimes where private arrangements have been co-opted as a form of
regulation which operate in the shadow of competition law and are
often seen as advancing competition objectives.
Cartels are an indispensable and integral part of economic coordination.
1
Cartels are cancers on the open market economy.
2
119
ß2011 The Author. Journal of Law and Society ß2011 Cardiff University Law School. Published by Blackwell Publishing
Ltd, 9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA 02148, USA
*UCD School of Law, University College Dublin, Belfield, Dublin 4, Ireland
imelda.maher@ucd.ie
Thanks to participants at the ECPR Regulatory Conference Standing Group Third
Biannual Conference who attended and commented on my presentation of an earlier
version of this paper there. Special thanks to the editors and Tony Prosser for their
comments. The usual disclaimer applies.
1 F.E. Koch, `Cartels as Instruments of International Economic Organization. Public
and Private Legal Aspects of International Cartels' (1945) 8 Modern Law Rev. 130, at
137.
2 M. Monti, speech to the Third Nordic Competition Policy Conference, Stockholm, 11
September 2000.
The OECD in its most recent report on cartel enforcement reiterated the
conclusion from its second report that cartels are unambiguously bad, causing
harm amounting to several billion dollars every year, affecting developed and
developing economies ± and especially the latter who lack the resources to
tackle them effectively.
3
Cartels are a risk in many sectors, for example, where
there are few market players and/or where raw materials are being provided.
4
In some sectors, cartels may be pervasive. For example, the Dutch competition
authority in 2005 decided to target cartels in the construction industry and more
than 500 companies came forward looking for immunity for notifying the
authority about cartel activity under its leniency programme.
5
This indicated
that the industry was heavily cartelized. In July 2010 the European
Commission imposed fines in excess of ¨175 million on animal feed
phosphate producers for operating a cartel which dated back to 1969. The
producers, over a 35-year period, met regularly to allocate market shares and
customers, set sales quotas, and coordinate prices and sales conditions where
they deemed it necessary.
6
The cartel only came to the attention of the
Commission when one of the participants acted as a whistleblower and
received full immunity from its fines. One of the largest cartels ever detected
was the vitamins cartel where vitamin manufacturers had colluded on market
shares and price.
7
First recounts that there were quarterly meetings and an
annual meeting of senior executives where prices and budgets for the year were
agreed. Efforts were made to disguise the cartel which involved companies in
Japan, the EU, Switzerland, and the United States. Very large fines were
imposed and senior executives from several of the participating firms were
given prison sentences in the United States, where private enforcement actions
were also brought. The EU, Australian, and Canadian competition authorities
also investigated the cartel.
8
Perhaps the most famous cartel was the lysine and
citric acid cartel which was the subject of a Hollywood film in 2009,
9
with one
company being investigated for its participation in that cartel while still a
member of the vitamins cartel,
10
showing the extent to which cartelization was
seen as an attractive business practice for the firm.
These few examples show the extent to which cartels can arise in inter-
120
3 OECD, `Hard Core Cartels ± Implementation of the 1998 OECD Recommendation'
(2006) 8 OECD J. of Competition Law and Policy 7±54.
4 See discussion of risk of cartels for the chemical industry in F. Distefano, `Cartel
Risks in the Chemicals Sector ± Lessons to Draw from Recent Cases and Areas to
Watch' (2011) European Antitrust Rev. s. 3.
5 OECD, op. cit., n. 3, p. 16.
6 European Commission, IP/10/985, 23 July 2010.
7 H. First, `The Vitamins Case: Cartel Prosecutions and the Coming of International
Competition Law' (2001) 68 Antitrust Law J. 711±29.
8 id., p. 717.
9The Informant! (2009), directed by S. Soderbergh, based on K. Eichenwald, The
Informant (2000). Both media provide a detailed account of how a major international
cartel can work.
10 First, op. cit., n. 7, p. 719.
ß2011 The Author. Journal of Law and Society ß2011 Cardiff University Law School
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