Cartel Activity Research Articles

The impact of cartel dissolution on prices: Evidence from the air cargo cartel

I analyze pricing behavior before and after the detection of an air cargo cartel using a novel, hand-collected dataset. I find that prices did not decline after the cartel's detection. Additionally, pricing patterns are consistent with post-cartel tacit collusion. My findings suggest that airlines' cartel activity (specifically, the development of a methodology for determining the collusive price) laid a foundation for future tacit collusion. As a result, airlines profited from cartel activity, and shippers paid elevated prices, long after the cartel's dissolution.

The Rise of #Cartels: Exploring the Organizational Operations and Messaging of Public Perception on Twitter

Mexican cartel activity has become increasingly violent, causing civilians to question the government’s ability to defend against this social and political threat. Within this context, the current study utilizes an exploratory framework to evaluate cartel portrayal on Twitter. We conducted a thematic analysis of data collected via the NVivo NCapture tool yielding 2,652 tweets spanning multiple countries, seeking to understand the key discourse associated with social perception of cartel activity, as well as the status and operations of Mexico’s cartels. Results revealed several areas of focus and varying sentiments based on population demographics, such as location, and type of content.

How Mafia-Like Bureaucratic Cartels or Thieves in Suits Run Corruption Inside the Bureaucracy, or How Government Officials Swindle Citizens in Kenya!

ABSTRACT As typical of many developing contexts, Kenyans know how most civil servants make an honest living out of public monies – in other words, there is generally nothing wrong with making a living, legal or otherwise, from where one works. But this situation can be more complex than that. Bureaucratic corruption is more about bureaucratic structure and culture (how things are done here), as well as the bureaucracy’s sociopolitical environments. Most importantly, variables relating to bureaucracy’s political outliers show that bureaucratic corruption can also be a tool of regime consolidation, a space of elite struggle for rewards and control. The result is that, a mafia-like white-collar corruption syndicate (cartels) and isolated corrupt practices emerge at all levels and sectors to enforce corruption and swindle citizens through unscrupulous bureaucratic processes. These cartels employ an assortment of enforcement tools to achieve their goals, from exercising official investigations to bribery, kickbacks, threats and murder. Using a multi-dimensional administrative rituals approach, this paper is a modest attempt to understand how these factors produce bureaucratic gray areas that rationalize and institutionalizes corruption and cartel activities. While the solution primarily lies with the political leadership, this cannot happen unless a civil society, instead of the opposition parties-led citizen movement, is reinvigorated in Kenya.

The Role of the “African” Summits of Summer 2023 in Building of a New World Order

The article analyses the results of the Second Summit and the Russia-Africa Economic and Humanitarian Forum, held on July 27-28, 2023 in St. Petersburg and its connection and influence on the course and decisions of the XV BRICS Summit, which was held on August 22-24, in Johannesburg (South Africa). The author focuses on the analysis of discussions on three innovative areas of Russian-African interaction that are not entirely expected and practically not addressed in scientific publications: issues of cooperation and exchange of experience between Russia and African countries in the field of combating money laundering and the financing of terrorism; combating anti-competitive practices, suppressing anti-competitive activities of cross-border cartels; external audit as a field of cooperation.

The Decriminalization of Cartel Activity in Kuwait: A Regulatory Framework

The Kuwaiti policymaker has never overlooked the protection of market competition. Anticompetitive practices have always been a concern in Kuwait; from the Kuwaiti Constitution 1962, which allows a legal monopoly for a certain time, and the Commercial Law Act 68/1980, to the Competition Protection Acts (CPA) of 2007 and 2020. However, the legislative responses to anticompetitive behaviours in Kuwait have varied, with criminal prohibition being historically dominant. Recently, with the introduction of the CPA 2020, Kuwait has decriminalized cartel activity. Although it may have been expected that the criminal nature of cartel activity should have been maintained, the major shift in Kuwait was contrary to the global trend towards criminalization. Cartel activity is now being dealt with within a regulatory framework, with only administrative sanctions. This paper suggests that the decriminalization in Kuwait weakens the argument that the global trend towards criminalizing cartel activity has always been driven by a top-down process. This paper has three aims: the first is to explore this inadvertently ‘neglected’ research area in Kuwait; the second is to discuss why cartel activity has been decriminalized, with a focus on the problem of ‘moral ambiguity’ as an explanation; and the third is to argue for the re-criminalization of cartel activity. Competition, Cartel Activity, Decriminalization, Moral Ambiguity, Kuwait

Whither Criminal Cartel Enforcement in the EU?

Cartels have been a persistent problem in the European internal market and despite strong enforcement, cartels continue to exist and be discovered by the Commission. This article proposes that the optimal way to deal with cartels requires the imposition of criminal sanctions against corporates and responsible executives. This is not a novel proposal in itself: the US has had criminal sanctions against cartels for over a century and the UK for a decade. But the EU’s unique regulatory and governance structure requires that such a proposal must have a stronger evidentiary basis and must take into account its governance structure. This article does so by analysing statistics on cartel enforcement in the EU and the US to show that fines have not been able to sufficiently deter cartels. Second, normative reasoning based on harm theory, morality of criminalisation and public choice theory is employed to indicate that cartel activities are criminal in nature and that penalising them as such would not amount to overcriminalisation. Third, objective analysis is used to dissect the limitations of fines: when used in isolation they do not target the wrongdoers, are suboptimal and impose social costs. Fourth, it is shown that combining fines with criminal sanctions can help us redress these issues and improve the deterrence levels significantly. Lastly, principles are proposed to ensure that such a proposal considers the varying gravity of cartel activities, and is in sync with the EU’s rule of law and governance structure and the Commission’s leniency programme.

Fragrance makers under investigation for cartel activity

Fragrance makers under investigation for cartel activity

The draftsman’s contract: Gianfranco Rosi’s El Sicario, Room 164

In Gianfranco Rosi’s El Sicario, Room 164 (2010), a former sicario (‘contract killer’) for a Mexican drug cartel narrates a twenty-year career of torture and murder. Veiled to preserve his anonymity, he delivers his 80-minute monologue within the confines of a motel room. Though the ‘talking head’ is a well-worn device associated with televisual documentary, Rosi’s film, shot on digital, might be said to be anchored in a cinematic documentary tradition by recourse to another medium: drawing. As the sicario talks, he sketches cartel activities ranging from drug transportation to brutal physical violence on the pages of a notepad. This article considers how Rosi’s filming of drawing in El Sicario reveals something significant of drawing in film, in documentary and in this director’s documentary films in particular. Informed by Jacques Derrida’s reflections on drawing and by the ethical thought of Emmanuel Levinas, I suggest that the drawing of El Sicario illuminates concerns fundamental to documentary film – of sight and its occlusion, of scepticism and faith, evidence and education.

Influence of transnational drug trafficking on the economy and security of Mexico

The article examines the impact of transnational drug trafficking on the economy and security of Mexico on the examples of the activities of several Mexican drug cartels operating in different parts of the country. The article analyzes the overall impact of drug crime on the economy and security of the country. Modern trends of drug crime are considered: fragmentation, diversification and competition between the subjects of drug crime. The conclusion of the study is that the federal government's ongoing policy to combat transnational crime only exacerbated the problem, leading to a further decline in the Mexican economy and internal security.

RETRACTED: Cross-Border Cartels Enforcement Under the Africa Continental Free Trade Area

Effective enforcement of competition laws on a global scale is a prerequisite for open economies, fair trading conditions, and level playing fields, and ultimately, inclusive economic development for improved and better lives. Improving enforcement co-operation between competition authorities has been a priority for the Organization for Economic Co-Operation and Development, United Nations Conference on Trade and Development, and International Competition Network for many years. This article argues that there is increased scope for competition authorities in Africa to effectively regulate cross-border cartel activities under the Africa Continental Free Trade Area (AfCFTA). It is recognized that for the AfCFTA to meet its general objectives under Article 3 of the AfCFTA framework agreement, States Parties must develop a framework on competition policy which is part of the second phase of the negotiations that will culminate into a Protocol on Competition Policy. Following a review of competition policies and laws of selected African countries in Southern African Development Community, East African Community, Economic Community of West African States, and Common Market for Eastern and Southern Africa, this article suggests an appropriate competition law and policy for Africa, particularly one that will enhance capability to combat cross-border cartels.

The Effects of Private Damage Claims on Cartel Activity: Experimental Evidence

AbstractPrivate damage claims against cartels may have negative effects on leniency: whereas whistleblowers obtain full immunity regarding the public cartel fines, they have no or only restricted protection against private third-party damage claims. This may stabilize cartels. We run an experiment to study this issue. Firms choose whether to join a cartel, may apply for leniency afterward, and then potentially face private damages. We find that the implementation of private damage claims reduces cartel formation but makes cartels indeed more stable. The negative effect of damages is avoided in a novel setting where the whistleblower is also protected from damages (JEL C90, L41, L44).

Achieving situational awareness of drug cartels with geolocated social media

Using geolocated tweets to achieve situational awareness is an often researched topic in disaster and emergency management. However, little has been done in the area of drug cartels, which, as transnational crime organizations, continue to pose great risk to the stability and safety of our communities. This paper made an initial effort in using geolocated social media (specifically Twitter) to achieve situational awareness of drug cartels through temporal and spatial analysis of derived named entity clusters. The results show that detecting peaks in the time series of frequently occurring entity clusters enabled the tracking of important events in public discourse surrounding drug cartels. Correlations between time series also provided valuable insights into the synchronicity between different events. Further examining the spatial distribution of key events for different countries, we identify thematic hotpots of public discourse on cartel activity. Our methodology also addresses issues of language ambiguity when working with noisy social media data in order to achieve situational awareness on drug cartels.Please check and confirm the city name is correctly identified in affiliations 1 and 2.confirmedPlease check and confirm the corresponding author and mail ID is correctly identified.confirmed

Dark Banking? Banks and Illicit Deposit Flows

Do banks enable organized crime? Does bank regulation insulate financial intermediation from criminal activity? I address these questions using evidence from the drug trade in Mexico, finding that local drug cartel activity causes an increase in bank deposits. Branch networks grow in affected areas; this growth is not driven by increased lending opportunities. Post-election of a law-and-order government, effects attenuate, with liquidity flowing into branches of U.S. banks along the border. I interpret this as evidence that finance follows crime in weak institutional environments, and that, absent transnational policy coordination, regulatory arbitrage via cross-border liquidity flows undermines banking regulation.

Cartels’ Birth and Death Dynamics: Empirical Evidence

Does the environment facilitate or inhibit collusion? This paper focuses on how the legal framework impacts cartel births and deaths. To avoid the inherent issue of sample selection bias of prosecuted cartel studies, we use a unique dataset covering the population of Swedish legal cartels registered between 1947 and 1993. We first consider a count model that focuses on the observed cartels. We then apply a hidden Markov model, which takes into account that cartel activity may have been imperfectly observed, since the probability of observing cartels varied with the register's efficiency. We consider a gradual tightening of competition law to study how cartels react to the legal environment. We find that the initial law changes had a deterring effect on cartels, while the impact of later changes is more ambiguous. Additionally, we show that cartel births are counter-cyclical, while cartel deaths appear pro-cyclical. Finally, interest rates are negatively correlated with cartel stability.

Cartel Activity and Recidivism

The existence and extent of recidivism have been highly debated in the last few years. This chapter examines the current theoretical, experimental and empirical literature on recidivism and related issues. It also presents novel evidence on: (i) the amount of recidivism in the EU between 1998 and December 2020 (up to 19% of cartel members, depending on how recidivism is defined); (ii) the trend of EU “leniency inflation” noticed by Marvao and Spagnolo (2018b), which is even steeper for multiple offending firms; and (iii) the ability of recidivists to use leniency programs strategically by rotating reports and using multi-market contact. While “true recidivism” seems to have been eliminated in the US (Werden et al., 2011), it appears to be on the rise in the EU. Although it represents only 2% of the cartel members, it should be interpreted as a lower bound estimate since many cartels may remain undeterred and undetected (Ormosi, 2013).

CARTELS AND THEIR ROLE IN THE ORGANIZATION OF PRODUCTION AND INTERNATIONAL TRADE

In the modern world economy, an extremely important role is played by large international holding-type companies, often referred to as transnational corporations, financial, financial-industrial and other groups. The enterprises of such companies are located and operate in most countries of the world and have a significant impact on the main parameters of the functioning of a wide variety of markets for goods and services. With their economic potential, which often exceeds the corresponding potential of individual states, these companies are able to influence the development of market relations in both positive and negative directions. The so-called international cartel agreements, which generally mean mutual agreements between companies that often contradict the current legislation of countries, in order to establish a monopoly on certain goods (services) produced, control and capture markets, have a particularly acute negative impact on markets. In this regard, the article presents a brief history of the activities of international cartels and law enforcement practice to restrict their activities. The forms and key provisions of cartel collusion of enterprises of various industry orientations and spheres of activity are characterized. Some compensation schemes and forms of punishment for suppressing fraudulent actions of cartel participants are outlined. At the same time, there are shown situations when cartel agreements have a positive impact on the development of production, international trade and market relations. Despite strict antitrust laws, international cartels are created and operate in the markets, which should be taken into account by domestic companies when planning the results of work for them

THE COADJUVANCY OF THE MALAYSIAN REGULATORY POLICIES IN ADDRESSING THE CARTEL ACTIVITIES IN MALAYSIAN CORPORATIONS

Cartels pose significant turbulence in many aspects, ranging from the increase in prices of goods and services to affect long-run economic growth and productivity. In 2010, the Competition Act was formulated to promote economic development by promoting and protecting the process of competition, thereby protecting the interests of consumers and to provide for matters connected therewith. However, in terms of the enforcement of the Act, Malaysia is still at the infancy stage. Hence, this paper attempts to examine the effectiveness of the Act in mitigating the cartel activities in Malaysia. Besides that, this paper also attempts to examine the collaborative feasibility between the Competition Act 2010 and Whistleblower Protection Act 2010 (Regulatory Policies) in addressing the cartel activities in Malaysian firms. This paper also offers suggestions to the policy makers to strengthen the feasibility of the Competition Act. Methodologically, an extensive literature review was carried out by the researchers based on the policies formulated in Malaysia and developed countries. A content analysis was also performed to identify major themes and delineate a crucial means to address cartel activities in Malaysia. The finding of the study revealed that there is a room for improvement in the Malaysian Competition Act 2010. Besides, the collaborative action between two regulatory policies are significant and it would be able to curb the cartel activities in Malaysia.

Collusion Along the Learning Curve: Theory and Evidence From the Semiconductor Industry*

I study the effectiveness of collusion during an international cartel in DRAM, a type of semiconductor characterized by learning‐by‐doing and multiproduct competition. First, by exploiting time and firm‐level variation in cartel activity, I estimate that cartel participants cut output more on the oldest product generation than on newer generations. This is consistent with a hypothesis that higher learning rates in newer generations make defection from collusive equilibria more attractive. Second, I formulate a test for defection from collusive equilibria in learning‐by‐doing industries. Third, I formalize these results in a theoretical framework and discuss implications for antitrust policy in high technology markets.

Cartel criminalisation and due process: the challenge of imposing criminal sanctions alongside administrative sanctions within the EU

There is increasing debate within the European Union (EU) concerning the imposition of criminal sanctions upon those individuals who engage in cartel activity. For it to be legitimate, such cartel criminalisation must respect the due process guarantees contained in the European Convention on Human Rights (ECHR). Unfortunately the literature on this issue is deficient and the specifics of this legal challenge are not fully understood. In particular, a comprehensive analysis of the due process-related challenge presented when personal criminal antitrust sanctions are employed alongside administrative sanctions for a given cartel is conspicuously absent from the literature. This article rectifies this deficiency by examining this particular legal challenge and its relevance to information exchange, double jeopardy and concurrent antitrust proceedings. In doing so, it identifies practical techniques designed to meet the challenge of due process in this context, as well as the inherent tensions between due process and the objectives of European antitrust criminalisation.

Forging cartels. A transatlantic perspective on business collusion and the interwar copper industry (1918–1940)

ABSTRACT This article examines the formation and activities of international copper cartels during the interwar period by focusing on the Union Minière du Haut Katanga (UHMK), one of the principal new entrants at that time. Rather than seeing interwar copper cartels as an expression of the rise of the American copper industry, cartels gradually came to reflect the expansion of production world-wide by absorbing new entry. New entrants were crucial in setting up the Copper Exporters Inc (CEI) and International Copper Cartel (ICC) cartels. In addition, the formation and organisation of copper cartels are examined from the point of view of state policies. It is argued that governments, both in the US as well as in Europe, welcomed or tolerated cartels so long as they could provide security and social stability for domestic employment by regulating competition. Such arguments even allowed firms to push the boundaries of what was legally accepted, as the export cartel CEI gradually transformed into a production quota cartel. Copper cartels thereby functioned as alternatives to protectionism until 1932. Thereafter, firms turned to more resourceful solutions to circumvent American antitrust legislation and protectionism, resulting in the ICC, which depended upon informal and indirect American business participation. Abbreviations: UMHK: Union Minière du Haut Katanga; SGM: Société Générale des Minerais; CEA: Copper Export Association; CEI: Copper Exporters Inc.; ICC: International Copper Cartel; ARA 1: Algemeen Rijksarchief/Archives du Royaume 1, Ruisbroekstraat 2, 1000 Brussel; ARA 2: Algemeen Rijksarchief/Archives du Royaume 2, Archiefdepot Joseph Cuvelier, Hopstraat 26-28, 1000 Brussel