Antitrust Price Remedies May Facilitate Collusion in Global Commodity Markets

Abstract

Difficulties of competition policy at the global level are widely debated by academics and policy-makers. However, recent discussions do not pay enough attention to those instruments of antitrust enforcement that target local companies in domestic markets. This type of antitrust price remedies becomes popular in Russian competition law enforcement towards large exporters that dominate in home markets. In this article we explain the circumstances under which antitrust price remedies imposed by national competition authorities on one exporter in a determined country may limit competition in global commodity markets. In particular, antitrust price remedies, which impose the cap on domestic prices using export or global prices of the commodity as a benchmark, increase the sustainability of collusion, either explicit or tacit. Being primarily designed to support domestic buyers, antitrust price remedies may also increase domestic welfare by facilitating collusion abroad and creating additional profits for large national producers.