Cartel Agreements Research Articles

Moral panic, moral regulation and essentialization of identities: Discursive struggle over unethical business practices in the Finnish national media

The study sheds light on the language of moral panic and moral regulation in the Finnish news media over a 9-year period on the subject of cartels and cartel agreements. What makes the case particularly interesting is that the object of the most explicit moral panic was the introduction of new laws (leniency programmes) designed to regulate illegal cartel behaviour. The main argument is that the construction of both moral regulation and moral panic in news media takes place through essentializing discursive claims that contribute to national identity construction. The study contributes to current literature on moral panics as ideologico-discursive phenomena and throws some light on the power-laden discursive processes that work to reconstruct, essentialize and stabilize identities. In addition, there are some suggestions as to why some moral panics fail to develop.

Cartel Organization, Price Discrimination and the Trans-Atlantic Passage, 1899-1911

This paper studies the operation of trans-Atlantic passenger shipping cartels during the period 1899-1911 and its effects on passenger traffic. We systematically document and categorize cartel agreements on the basis of key aspects of internal organization. Then, we exploit the variation in internal organization across markets and over time to investigate whether any specific organizational aspects were more effective in reducing flows from competitive levels. We find some evidence that the assessment of fines for violations of the agreement enhanced collusion, but no evidence that the posting of bonds (to guarantee the fines) or the formation of pooling arrangements had any incremental effect. We also take advantage of the richness of the data on passenger flows to show that collusion had a smaller effect on first and second-class passenger flows relative to third class service. Finally, we provide estimates of consumer substitution across passenger classes due to collusion and show that such substitution was small but non-negligible, especially during periods of normal cartel operation. Our study has broader implications for the theory of collusion, and on how collusion affects the quality, rather than the quantity, of products purchased by consumers.

Estimating Damages from Price-Fixing - The Value of Transaction Data

We use a unique private data set of about 340,000 invoice positions from 36 smaller and larger customers of German cement producers to study the value of such transaction data for an estimation of cartel damages. In particular, we investigate, first, how structural break analysis can be used to identify the exact end of the cartel agreement and, second, how an application of before-and-after approaches to estimate the price overcharge can benefit from such rich data sets. We conclude that transaction data allows such a detailed assessment of the cartel and its impact on direct customers that its regular application in private antitrust cases is desired as long as data collection and preparation procedures are not prohibitively expensive.

EXIGENCY AND INNOVATION IN COLLUSION

This article examines the evolution of price fixing, and how new means of colluding have been utilized by firms facing financial exigency. The cartel agreement that prevailed in the air freight industry from 1997 to 2005 will be used to illustrate the search for new methods of price fixing. Unlike previous arrangements, the airlines implicated in the scheme did not seek to manage final prices, but rather the fuel, security, and customs surcharges applied to each fare—despite a warning from their own trade association that such a practice was probably illegal. The utilization of common surcharges adds a new dimension to cartel behavior, as this appears to be the first price-fixing agreement that used such a mechanism to manipulate net returns. Unfortunately for the nearly thirty airlines involved, the setting of common surcharges was highly visible to both end users and regulators, leading to complaints filed by both the U.S. Department of Justice and the European Commission. The airlines' willingness to risk punishment fines arose out of financial exigency brought on by escalating fuel prices. Once the cartel began to unravel, initially with a confession by executives from Lufthansa, it became apparent that most of the aviation sector was involved.

Leniency Program as an Innovative Legal Tool for Fighting Cartels within The European Union

The article focuses on discussing the substance of the institution of leniency which is used against cartel agreements. The study was carried out with regard to the provisions of EU law and Polish law. The paper analyses the factors that determine the effectiveness of the leniency program. Some of the considerations were given to the practical effects of applying the scheme by the European Commission and the Office of Competition and Consumer Protection. The article discusses the issue of the impact of the leniency program on the effectiveness of antitrust proceedings and shows the factors which determine the effective functioning of the program.

The legal surrealism of George Herriman's Krazy Kat

In 1947, three years after George Herriman’s death ended Krazy Kat’s thirty-one year run, the prominent legal realist and theorist Karl Llewellyn published a brief but effervescent review of a Krazy Kat collection in the Columbia Law Review. The page count of the new collection was playfully listed as ‘unnumbered; many, but not enough’ (Llewellyn 1947: 337), subtly indicating that neither the review, nor the material it addressed was typical law journal fodder. In that era, it was rare for the world of comics and mass culture to surface in the annals of a law review. The article’s placement between one review of a book on cartel agreements and another review of a report on the Permanent Court of International Justice’s future only amplified the uncanniness of the two-page piece.

Private Monitoring and Communication in Cartels: Explaining Recent Collusive Practices

Motivated by recent cartel practices, a stable collusive agreement is characterized when firms' prices and quantities are private information. Conditions are derived whereby an equilibrium exists in which firms truthfully report their sales and then make transfers within the cartel based on these reports. The properties of this equilibrium fit well with the cartel agreements in a number of markets including citric acid, lysine, and vitamins. (JEL D43, D82, K21, L12, L61, L65)

Strictness of leniency programs and asymmetric punishment effect

We analyze the impact of leniency programs on the behavior of firms participating in illegal cartel agreements in a two-stage repeated game model. Our approach takes into account asymmetric punishment effect and allows to discuss the design of leniency programs in the setting with asymmetries. The main contribution of the paper is that we consider heterogeneous firms. This heterogeneity results in additional costs in case of disclosure of the cartel, which are caused by asymmetric punishments. Next, following current antitrust rules, we analyze effects of the strictness of leniency programs, which reflects the likelihood of getting a complete exemption from fine even in case many firms self-report simultaneously. Our main conclusion is that leniency programs work better for small companies, since a lower rate of law enforcement is needed in order to induce self-reporting by smaller firms, while big firms are less likely to start a cartel in the first place given the possibility of self-reporting in future. Finally, we analyze optimal enforcement strategies of the antitrust authority and conclude that the authority with limited resources should implement more generous leniency rules the more cartelized the economy is.

Is the Coach Paid too Much?: Coaching Salaries and the NCAA Cartel

Recently, a great deal of controversy has been generated from the salaries earned by head coaches in the NCAA. Although many figures in the world of sports earn high salaries, one important difference in the case of the NCAA is that the players do not get paid. We develop a model that shows that a cartel agreement to not pay the players raises the coach's salary if some players choose where to play based on the identity of the coach. The agreement not to pay the players improves competitive balance in the baseline model, but this result does not generalize.

Problematyka charakteru prawnego odpowiedzialności podmiotów zbiorowych za czyny zabronione pod groźbą kary w prawie polskim

Corporate liability for off ences was introduced to the Polish law by the Convention on the Protection of the European Communities ´ Financial Interests of the 26 July 1995 and also by the First and the Second Protocol to the Convention. The Convention imposed on the Member States the obligation to apply certain measures to establish criminal liability of a person having a leading position in the legal person for the frauds against the European Communities financial interests. In the second protocol, however, there is a requirement to introduce corporate liability for such off ences committed in the corporate interest by the person who has a power of representation of the legal person, an authority to take decisions on behalf of the legal person or an authority to exercise control within the legal person. None of the mentioned acts, however, involves the provision indicating the form of corporate liability. In the Polish law there was adopted the Act of the 28 October 2002 called “ The Liability of Collective Entities for Off ences ” . The form of the liability established in this statute was controversial from the early beginning. There are certain points which allows to accept the idea of criminal liability of collective entities. On the other hand, there are also reasons for which it is possible to claim that corporate liability established in the Polish law is a new form of liability, only similar to criminal liability. Criminal liability of legal persons is very well known in criminal law area. Historically, the fi rst introduced model of corporate liability was so called “ vicarious liability ” . In the consequence, the legal person was sanctioned because a person with whom it had a bond, committed an off ence. The other form of criminal liability was “ direct liability ” also called “ the theory of controlling off icer ” . The point of the mentioned theory was to accept the acts of a person who was in the structure of corporation as the acts of the corporation itself. The third conception was the aggregation doctrine, also known as “ collective knowledge ” or “ aggregation knowledge ” . The meaning of that doctrine was an assumption that the actions taken by people who were the members of corporation , might be combined in one act of the corporation. Criminal liability of legal persons was introduced also in the Polish law by the Act of Cartel Agreements of the 13 July 1939. It is beyond a discussion that the Act of the 28 October 2002 is a piece of repressive legislation. It is strongly emphasised that criminal nature of the mentioned statue results from the Constitution. Constitutional meaning of criminal liability, however, is not the same as in Criminal Code. The another point might be the jurisprudence of the European Court of Human Rights, which accepts a wider meaning of criminal case. On the other hand, in the view of the mentioned statue, the corporation does not commit itself an act which is forbidden as an off ence but the responsibility of the corporation is a result of the act committed by its member. Thus, it is secondary liability. It is also claimed that “ mens rea ” and “ actus reus ” known in criminal law can not be attributed to corporate liability. Therefore it is justifi ed to say that there has been created a new form of liability. The similar approach seems to present the Constitutional Tribunal in the verdict of 3 November 2004, Case K 18/03. Nevertheless, some authors claim that the discussed statute has a criminal nature and it could be assessed as a pieces of Criminal Law sensu largo . Others point out that such institutions used in the statue as culpa in eliegndo or culpa in custodiendo contradict its criminal nature. It is beyond a discussion that the statute doses not refer to Criminal Code at all. Considering all above, the more convincing is the idea of “ quasi-criminal liability of corporations ” . That form of liability is a piece of repressive legislation. It is very similar to criminal law, but can not be counted to that branch of law. Normal 0 21 false false false PL X-NONE X-NONE /* Style Definitions */ table.MsoNormalTable {mso-style-name:Standardowy; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-parent:; mso-padding-alt:0cm 5.4pt 0cm 5.4pt; mso-para-margin:0cm; mso-para-margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:10.0pt; font-family:Times New Roman,serif;}

Cartel Laws Undermined: Corruption, Social Norms, and Collectivist Business Cultures

The combination of leniency programmes, high sanctions, complaints from customers and private actions for damages, has proven very successful at uncovering and punishing cartel agreements in United States Antitrust Law. Countless jurisdictions are being encouraged to adopt these ‘conventional’ enforcement tools, in the absence of an international competition authority. This paper identifies three issues which may undermine the universal efficacy of these cartel laws: (i) corruption and organized crime; (ii) social norms that are sympathetic to collusive practices; (iii) collectivist business cultures built on personal relationships.

Constructing Illegitimacy? Cartels and Cartel Agreements in Finnish Business Media from Critical Discursive Perspective

During the last decade, any questionable or illegal behaviour on the part of businesses has received considerable attention in the media. Using a critical discursive perspective, we here investigate how the media constructs one type of questionable business as illegitimate. Our data draw upon articles dealing with cartels and cartel agreements in Finnish business media covering the five year period 2002–2007. Our contributions are following: We add to the current literature on CSR and national businesses, suggesting that regardless of globalization socio-cultural history plays an important role in constructing the illegitimacy of business practices. We therefore emphasize the importance of media as an arena where social actors construct the social contract between business and society. We further contribute to studies on questionable business by reconstructing a discursive framework used to construct cartels and cartel agreements.

Collusion et anticipation: une analyse empirique sur un cas historique

This empirical analysis focuses on the impact of the economic cycle on firms' ability to sustain cooperative behavior within an explicit cartel agreement that existed during the interwar period in the Northern French coalfields. The basic model is based on Bresnahan (1982) and adapted to the coal industry. In order to identify the degree of oligopoly, we first assume the independence of marginal cost with respect to the basin's production and second, we study the case of a marginal cost depending on the basin's production.

Trade Costs and Multimarket Collusion

This paper explores the implications of reciprocal trade liberalization for implicit collusion and welfare in the context of a symmetric, homogeneous goods duopoly model with multi-market contact and quantity competition. One of our principal findings is that collusive conduct does not necessarily entail geographic separation of markets and cessation of intra-industry trade. Our analysis also reveals that, when trade costs and discount factors are not too high, efficient cartel agreements that involve the cross hauling of goods are easier to sustain because they circumscribe deviation incentives. As a consequence, for a certain range of discount factors, welfare is higher when there are no trade costs than when trade costs are so high that they eliminate trade. This establishes an important sense in which trade liberalization is pro-collusive in the neighborhood of unimpeded (i.e., free) trade. In contrast, reductions in trade costs are welfare-improving when they are high enough to eliminate trade flows in the efficient cartel agreement. The analysis examines both tariffs and transport costs and compares their effects on welfare. The model is also extended to consider the presence of more than one firm per country and to study the implications of imperfect substitutability in demand.

Trade costs and multimarket collusion

Contrary to conventional wisdom, this article argues that trade liberalization may facilitate collusion and reduce welfare. With the help of a duopoly model in which firms interact repeatedly in multiple markets, we first show that, if trade costs (i.e., tariffs/transport costs) and discount factors are not too high, efficient cartel agreements necessitate the cross‐hauling of goods, as that entails lower deviation incentives. In this setting, we then demonstrate that reciprocal trade liberalization always raises total output when trade costs are within a range whose lower bound exceeds a threshold level, but may reduce total output (and thus be pro‐collusive) when trade costs are below that threshold level.

The JEC Revisited: Did Debt Undermine Stability?

The Joint Executive Committee (JEC), one of the most studied cartels in all of economics, was at best partially successful at maintaining collusion. The railroad cartel faced frequent breakdowns and re-contracting efforts. This paper considers the effects that large capital debt may have had on the members of the JEC. The JEC is compared to the express cartel of the period in which all firms were creditors. The latter had no breakdowns during the same period. It is shown through a small modification in an oligopolistic supergame that debt-burdened firms are less likely to maintain a stable cartel agreement than a cartel of creditors, a result that is consistent with the experience of these two cartels.

Beyond the Cartel Law Handbook: How Corruption, Social Norms and Collectivist Business Cultures Can Undermine Conventional Enforcement Tools

The combination of leniency programmes, high sanctions, complaints from customers and private actions for damages, has proven very successful at uncovering and punishing cartel agreements in the US. Countless jurisdictions are being encouraged to adopt these 'conventional' enforcement tools, in the absence of an international competition authority. The purpose of this paper is to widen the debate on cartel enforcement by identifying three issues which can undermine their effectiveness in some jurisdictions: (1) Corruption and organised crime; (2) Social norms that are sympathetic to collusive practices; (3) Collectivist business cultures built on personal relationships.

APPLICATION OF GAME THEORY FOR DUOPOLY MARKET ANALYSIS

The paper provides the analysis of game theory models application to identify duopoly market equilibrium (quantities sold and market prices), to evaluate and compare the results of enterprises in a market. The purpose of the analysis is to determine to what extent theoretical models correspond to real life, that is how reliable they are in supporting and estimating decisions of duopoly companies, fortifying market prices and quantities sold, evaluating company's competing positions and possibilities for decision co‐ordination. To describe discrete strategies equilibrium the “Prisoner's Dilemma” model is applied to a hypothetic market entrance game with possible side payments. Further analysis of the market entrance game incorporates mixed strategies based “Matching Pennies” model in case discrete strategies equilibrium does not exist. Continuous strategies are described analyzing hypothetic duopoly by applying Cournot, Stackelberg and Bertrand models. The first and the second mover advantage issues are raised comparing outcomes of dynamic Stackelberg and Bertrand games for a leader and a follower. Stability and utility of cartel agreement for its participants is mathematically supported with the help of a multi‐step repeated Cournot game. Having described, compared and applied the main game theory models to artificial duopoly market situations, the author passes over to the comparative analysis of the models’ weaknesses and problems related to their practical application.

Is the Coach Paid Too Much? Coaching Salaries and the NCAA Cartel

Recently a great deal of controversy has been generated from the salaries earned by head football coaches in the NCAA. On one level this seems odd since many figures in the world of sports and entertainment earn exceptionally high salaries. However, one important difference in the case of NCAA football is that the players themselves do not get paid. We develop a model which shows that a cartel agreement to not pay the players raises the coach's salary if some players choose where to play based on the identity of the coach. For some parameters, the gain in the coach's salary exceeds the loss in salary experienced by the player. On average, the agreement not to pay the players improves competitive balance.

Damages for the Infringement of Art. 81 EC by Cartel Agreements According to sec. 33(3) GWB: The Changes of Law Concerning “Protective Law” Requirement and the “P

On 1 July 2005, the German legislator amended 33 GWB [Act against Restrictions of Competition] and introduced a specific statutory basis for the private enforcement of European Competition Law. This article focuses on damages claims for the infringement of Art. 81 EC by cartel agreements in German courts and highlights the legal changes to the eligibility to damages. Previously, German courts were forced to utilize general tort law when awarding damages for the infringements of Art. 81 EC. However, some German courts were very reluctant to award damages. Only a person who was the direct target of cartel was considered to be eligible for damages. The article establishes that this jurisdiction, to which some courts might still resort when judging on damages claims for cartel agreements prior to 1 July 2005, is inconsistent with European Law principles and irreconcilable with the ECJ’s decision in Courage Ltd. v. Crehan. Furthermore, the article addresses the statutory exclusion of the “passing on“ defence. Cartel members are now prevented from arguing that applicants passed higher prices on to their customers and did not suffer any economic loss. Yet, as far as cartel-inflicted prices of processed goods are concerned the exclusion of the “passing on“ defence can prove to be irrelevant depending on the method of assessing damages.