Criminalizing Cartels: An American Perspective
| DOI | 10.1177/203228441000100207 |
| Author | Albert A. Foer,Simcha Udwin,John M. Connor |
| Published date | 01 June 2010 |
| Date | 01 June 2010 |
| Subject Matter | Article |
New Journal of Eur opean Crimina l Law, Vol. 1, Issue 2, 2010 199
CRIMInALIzIng CARteLs:
An AMeRICAn PeRsPeCtIVe
J M. C, A A. F and S U*
Although the debate over whether to crimina lize anti-cartel enforcement is still
building around the world, t here is a strong case in its favor. We use the term “cartel”
to refer to the particular types of horizontal c ollusion that would be subjected to
crimina l sanctions in criminal-law jur isdictions, namely the most unambig uous
(“naked”) and socially harm ful (“hard-core”) forms of price xing, bid-rigging, and
market allocation.1 I n our view, crim inalization is a policy that reects pragmatic
governmental i ntervention in economic systems characteri zed by heavy reliance on
free markets.2 is pol icy is based on exp erience and reason and is supported by
moral considerations.
We explain general harms of cartels; summar ize the empirical evidence to date on
the frequency and seriousness of t he car tel problem; discuss the extent to which
crimina lization draws on un iversal moral concerns; a nd discuss pragmat ic
considerations of crimina lization’s eectiveness in deterring car tels.
* John M. Con nor is Professor of I ndustrial Ec onomics, Purdue Unive rsity, West Lafayette, Indiana
and a Senior Fellow of the American Antitru st Institute. Albert A. Foer is President of the American
Antitrus t I nstitute. Simcha Udwi n i s a lawyer and an America n Antitrust Inst itute Research
Fell ow.
1 In th is paper we are concerned with sanct ionable cartels and thus omit di scussion of cartels create d
by international treaties or otherwis e protec ted by sovereignt y. e OECD denes a h ard-core
cartel as any ant icompetitive ag reement, pract ice or arr angement to “x prices, ma ke rigged bids
(collusive tenders), establ ish output restric tions or quotas, or sha re or divide marke ts by allocati ng
customers, suppliers, territories , or lines of commerce.” It provides an exception for those agreements
that “a re reasonably related to the lawful real ization of cost-reducing or out put-enhancing
eciencies.” Not a ll jurisdic tions recogni ze such exception s. OECD Recommend ation to Member
Countries. Recommendatio n of the Co uncil concerni ng Eective Ac tion against Hard Core Car tels.
(199 8).
2 We wi ll use the American ter minology, “antitr ust,” recognizi ng that in E urope approximately the
same forms of govern ment intervention may be referre d to as “competition-law policy.”
John M. Connor, Alber t A. Foer and Simcha Udwin
200 Intersentia
1. THE NATURE OF THE CARTEL PROBLEM
1.1. ECONOMIC IMPACT OF DETECTED INTERNATIONAL
CARTELS: SOME BASIC FINDINGS
e economic impacts of t he modern international car tel movement have been
comprehensively reviewed in a n examination of v irtually al l hard-core international
cartels publicly and privately prosecuted in the EU, US, Asia and elsewhere between
1990 and December 2008. (Each car tel had members with headquarters in two or
more nations).3
– At least $16 trillion of sales were aected by col lusion.
– Aected sales i ncreased seven-fold from 2000–2004 to 2005–2008 .
– Median overcharges range from 17% to 21%, a massive transfer of wealt h from
buyers to the owners of cartels.
– Median overcharges vary lit tle from country to country but do range signicantly
by industry, a nd are particu larly h igh in branded consumer goods (exceeding
40 %).
– e overwhelming majority of cartels colluded on industrial, not consumer,
goods.
– 2,400 corporate pena lties were imposed worldwide.
– Penalties totaled $63.3 billion (54% through government prosecution; 46% through
private settlement).
– e EC has imposed t he most penalties, followed by the EU nationa l competition
authorities .
– Together, both have imposed four times more penalties ($22.8 billion) than the US
Department of Justice (about $5.5 billion).
– e EC imposed penalties on over 598 rms .
– e number of secret cartel s detected has been consistently rising every where but
in the US and Canada , where, in the last few years, detections are slowi ng.
– Most cartels have 5 or fewer members (making c artels more cohesive).
– Corporate cartelists originated from 57 countries, with the overwhelming majority
from Western Europe and Asia.
– e median duration of al l international cartels is about 57 months.
Clearly, the economic impact of cartels i s signicant in the European Union.
3 John M. Connor, Cartel s and Antitrust Portrayed: Private International Ca rtels from 1990 to 2008.
American Antitrus t Institute Working P aper #09–06, available at www.ant itrustinstit ute.org/
Archives/worki ng_paper_09 –06.ashx. Note that the author has made no eort to collect information
on the thousand s of generally smal ler domestic cartel s detected during t hese years.
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