Cartel Policy Research Articles

EU Cartel Policy and Enforcement: Challenges and Responses

Journal Article EU Cartel Policy and Enforcement: Challenges and Responses Get access Maria Jaspers, Maria Jaspers Search for other works by this author on: Oxford Academic Google Scholar Oliver Jany Oliver Jany Search for other works by this author on: Oxford Academic Google Scholar Journal of European Competition Law & Practice, lpad021, https://doi.org/10.1093/jeclap/lpad021 Published: 06 June 2023 Article history Received: 02 May 2023 Revision requested: 05 May 2023 Published: 06 June 2023

The impact of EU cartel policy reforms on the timing of settlements in private follow-on damages disputes—an empirical assessment of cases from 2001 to 2015

Abstract Private cartel damages litigation is on the rise in Europe since early 2000. This development has been initiated by the European courts and was supported by various policy initiatives of the European Commission, which found its culmination in the implementation of the EU Directive on Antitrust Damages end of 2016. This article explores the impact of this reform process on effective compensation of damaged parties of cartel infringements. For that purpose, we analyse all European cartel cases with a decision date between 2001 and 2015, for which we analyse litigation activity and speed. Overall, we find a substantial reduction of the time until the first settlement (increase in litigation speed) together with a persisting high share of cases being litigated (high litigation activity). This supports the view that the reform not only increased the claimant’s expectation about the amount of damages being awarded but also resulted in an alignment in the expectations of claimants and defendants in the final damages amount, ie the European Commission succeeded in reaching its objective to clarify and harmonize legal concepts across Europe.

Politik Kartel di Tingkat Lokal: Studi Pemilihan Wakil Gubernur Kepulauan Riau Periode Sisa 2016-2021

This paper discusses the behavior of political party in Deputy Governor election (Pilwagub) at Riau Islands Province (Kepri) 2017 with rational choice and cartel politics approach. The DPRD of Riau Islands Provincial decision to to choose and assign Isdianto as Deputy Governor requires controversy, it is caused by the domination of one coalition over the other in the 2015 Governor election. This study argues that the motive for power in inter-party relations at the local level, especially those who have seats in Parliament of Riau Islands Province, tends to influence DPRD’s decision. Political parties effort at the local level through electoral changes are characterized by the pragmatism of political parties. The parties that competed in the 2015 Pilgub challenged reconciliation since the 2017 governor election. The findings of this study are those that discuss cartel policy through unseen agreements that are reflected in the DPRD's plenary decision by acclamation.

The Impact of EU Cartel Policy Reforms on the Timing of Settlements in Private Follow-On Damages Disputes: An Empirical Assessment of Cases from 2001 to 2015

Private cartel damages litigation is on the rise in Europe since early 2000. This development has been initiated by the European courts and was supported by various policy initiatives of the European Commission, which found its culmination in the implementation of the EU Directive on Antitrust Damages end of 2016. This paper explores the impact of this reform process on effective compensation of damaged parties of cartel infringements. For that purpose we analyse all European cartel cases with a decision date between 2001 and 2015, for which we analyse litigation activity and speed. Overall, we find a substantial reduction of the time until first settlement (increase in litigation speed) together with a persisting high share of cases being litigated (high litigation activity). This supports the view that the reform not only increased the claimant’s expectation about the amount of damages being awarded, but also resulted in an alignment in the expectations of claimants and defendants in the final damages amount, i.e. the European Commission succeeded in reaching its objective to clarify and harmonize legal concepts across Europe.

Shifts in government business relations: Assessing change using the restrictive business registers in the OECD, 1945-1995

The varieties of capitalism framework highlights the governance of firms’ competitive behaviour as a key aspect of state-business relations. This article examines changes in the scope, intensity and transparency of cartel registers in 13 OECD countries in the half century following World War II. Quantifying these policy aspects over five decades using the OECD’s 2013 New Indicators of Competition Law and Policy reveals changes in government-business relations over time, with different approaches evident in each country. The results reveal complex interactions effect policy in each country and challenge a simple ‘Americanisation’ explanation for changes in cartel policy and the static typology of the VoC literature.

Wide Prospects and Ravines of Competition Policy

The goals of competition policy have been a subject of debate almost since its inception. Competition agencies in developing countries are tasked with a wider range of goals than their counterparts in developed countries due to specific traits of the economic and institutional environment of the former. Goal complementarity, path-dependence, comparative efficiency of other government agencies and market characteristics specific to developing countries might make antitrust tools more effective and efficient in dealing with problems that are not strictly antitrust-related. However, no goals are 100% complementary, and can sometimes come into conflict. The mechanisms chosen to prioritize the goals can influence the outcome for competition as well as social and consumer welfare. Additionally, even if the goals are conventional, they can be misinterpreted in the course of implementing competition policy. The paper examines Russia’s recent National Plan for the Development of Competition in the Russian Federation for 2018-2020 and some of the goals postulated there to show how they correspond to the theory of industrial organization and the principles of law and economics. A similar analysis is done on the recent Report on regional development of competition in its section on cartels, which shows how the indicators chosen by the FAS Russia to evaluate its cartel policy can shift the emphasis of enforcement, lead to enforcement errors and distort the incentives of the authority itself as well as economic entities.

Relative efficiency of oil price versus oil output in promoting economic growth: Is OPEC’s strategy right?

A dilemma faced by oil exporting countries is the relative efficiency of the traditional OPEC cartel policy of setting quotas to target a certain crude oil price level versus the policy usually followed by non-OPEC countries of choosing the crude oil output level that maximizes profits, taking the oil price level as given. This paper contributes to the oil and macroeconomics literature by using panel cointegration techniques that consider cross-sectional dependence and structural breaks to study the relative efficiency of these policies to promote economic growth in oil exporting countries.

The European Commission's Fight against Cartels (1962–2014): A Retrospective and Forensic Analysis

AbstractOn the basis of information collected from all the published European Commission's decisions in cartel cases between 1962 and 2014, this paper identifies different stages in the supra‐nationalization of cartel policy at the European Union (EU) level. It analyzes major competition policy reforms, strategies and initiatives taken by the European Commission (EC), and its relationship and interaction with Member States’ resistance and other policy players’ positions, which offers a new in‐depth study on the history and political economy of a key pillar of EU integration. It also provides a forensic analysis of the sanctioned cartels at each stage. This study shows that the introduction of the leniency programme was a critical juncture that allowed cartel authorities to identify cartels more effectively and to provide evidence for sanctioning collusion much more easily than before. This success was a key determinant for deepening the EU integration in competition policy. The intended drivers and the paradoxically unexpected shifters of such growing integration in cartel policy enforcement at the EU are discussed.

Cartel Attributes and Cartel Performance: The Impact of Trade Associations

This paper employs a cartel policy experiment, the National Industrial Recovery Act of 1933, to examine whether industries that have trade associations in place prior to cartelization were better able to attain collusive outcomes than otherwise. Trade associations could potentially help industries better formulate effective cartel rules and could help with monitoring. We find that industries with trade associations were more successful in achieving collusion–proxied by either reductions in industry output or increases in industry prices–than those without. In fact, industries without trade associations were generally unable to successfully collude under the NIRA.

Economic Impact of Competition Policy: A Look Beyond Consumer Surplus

Competition authorities try to mitigate negative distortionary effects on the markets by tackling abuse of market power or cartels and by controlling mergers. This study attempts to assess the impact of these endeavours by going beyond calculations of lumpsum effects on consumer surplus. We revise the simulation of Van Sinderen and Kemp (Economist 156(4):365–385, 2008) who use a cut in income taxes as a modelling device to simulate the impact of anti cartel policies. Our approach avoids attributing effects caused purely by changes in taxation to market power and uses changes in the Lerner index as the impuls. We have updated the model to enable simulating the impact of competition policies on productivity and R&D in order to get a balanced view on the effects. We find that the re-distribution of surplus from producers to consumers supported by ACM in this new setting is likely to have a positive effect on productivity, GDP, wages and consumption, and a small positive effect on employment. This differs from the outcome of Van Sinderen and Kemp, who did not find a positive impact on productivity, due to an overestimation of the employment growth.

Does product market competition increase strike activity? Evidence from the UK

Although many studies have examined the effect of labour market characteristics, macroeconomic fluctuations and workplace-level factors on strike activity, much less is known about industry-level determinants of industrial conflict, and in particular the role of product market competition. I examine the effect of competition on strike activity using evidence from a natural experiment of policy reform, the introduction of cartel legislation in the UK in the late 1950s. My econometric analysis, which takes advantage of the fact that different industries were affected to varying degrees by cartel policy, establishes that both the number of strikes and the number of working days lost as a result of strikes increased significantly when competition intensified after the abolition of cartels. I propose an interpretation of these results with reference to theoretical models of bargaining with asymmetric information.

Oil Price Versus Oil Output: Is Opec's Strategy Right?

The goal of this paper is to analyze the impact of OPEC’s oil price level versus oil supply strategy on the country’s gross domestic product (GDP) growth rate. Our motivation comes from a fundamental dilemma facing OPEC nations. Its members need to choose between the traditional OPEC cartel policy of setting quotas to target a certain oil price level versus that of choosing the oil output level that maximizes profits of oil producing firms. The main objective of this research is to investigate the relative efficiency of these two policies in promoting long-run economic growth in oil exporting countries. For that purpose, it uses time-varying parameter models in order to account for multiple structural breaks that characterize the crude oil market. This paper contributes to the oil and macroeconomics literature by showing that the impact of crude oil output on oil exporters’ GDP growth is much stronger than that of oil price fluctuations.

Policy Innovations, Political Preferences, and Cartel Prosecutions

Though antitrust cartel cases have received significant attention, the policy determinants and the political preferences that guide such enforcement remain understudied. We empirically examine the intertemporal shifts in U.S. cartel cases during the period 1969–2013. This period has seen substantive policy innovations with increasing penalties that are related to fines and jail terms. There appear to be four distinct cartel policy regimes: pre-1978, 1978–1992, 1993–2003, and 2004–2013. Our empirical estimates show significant variation in the number of cartel cases initiated and the penalties imposed across the policy regimes. The more recent regimes are characterized by far fewer cartel cases initiated, but with substantially higher penalties levied on firms and individuals. While effective deterrence is one explanation for these patterns, we are more inclined to conclude that U.S. cartel enforcement has seen an underlying shift away from focusing on smaller cartels to larger and multinational cartels. In terms of political effects, our results reveal no clear inter-political party effect, but there appear to be interesting intra-political party effects. We find that particular Presidencies matter for cartel enforcement, and variation across Presidential administrations led to marked shifts in the total number of cartel cases initiated. Overall, the shifts in the prosecution patterns portray changing policy priorities and a search for the optimal enforcement design to curtail one of the clearest sources of welfare loss, collusion.

Policy Innovations, Political Preferences, and Cartel Prosecutions

While price-fixing cartel prosecutions have received significant attention, the policy determinants and the political preferences that guide such antitrust prosecutions remain understudied. We empirically examine the intertemporal shifts in U.S. antitrust cartel prosecutions during the period 1969-2013. This period has seen substantive policy innovations with increasing penalties related to fines and jail terms. There appear to be four distinct cartel policy regimes: pre-1978, 1978-1992, 1993-2003, and 2004-2013. Our empirical estimates show significant variation in the number of cartels prosecuted and the penalties imposed across the policy regimes. The more recent regimes are characterized by far fewer cartels prosecuted, but with substantially higher penalties levied on firms and individuals. While effective deterrence is one explanation for these patterns, we are more inclined to conclude that US cartel enforcement has seen an underlying shift away from focusing on smaller cartels to larger and multinational firms. In terms of political effects, our results reveal no clear inter-political party effect on cartel prosecutions, but there appear to be interesting intra-political party effects. We find that particular Presidencies matter for cartel prosecutions, and variation across Presidential administrations led to marked shifts in the total number of cartels prosecuted. Overall, the shifts in the number of cartels prosecuted and penalties levied portray changing policy priorities and a search for the optimal enforcement design to curtail one of the clearest sources of welfare loss, collusion.

From paradise to hell. Post-war cartel policy and practice in the Netherlands

En matière de cartellisation, le cas néerlandais paraît exceptionnel. Durant la période de l’après-guerre, les cartels réussirent à s’intégrer au sein d’une politique gouvernementale de régulation et de coordination visant à la reconstruction et à la croissance économique. Cela a abouti à une législation très douce en matière de concurrence. Les cartels étaient légaux et dans la plupart des cas, cela contrastait fortement avec les politiques européennes et américaines en la matière. C’est ainsi que les Pays-Bas ont acquis le privilège douteux de constituer un paradis des cartels. Ce fut seulement dans les années 1990 que tout a changé, après que l’intégration européenne se soit développée et que la législation soit devenue plus stricte. Il était clair cependant que les Pays-Bas étaient des retardataires en ce domaine. Les hommes d’affaires néerlandais s’étaient accrochés à leurs politiques de coopération et d’association. À cet égard, le système néerlandais des affaires a semblé conserver ses caractéristiques coordonnatrices pendant longtemps.

Policy Innovations, Political Preferences, and Cartel Prosecutions

While price-fixing cartel prosecutions have received significant attention, the policy determinants and the political preferences that guide such antitrust prosecutions remain understudied. We empirically examine the intertemporal shifts in U.S. antitrust cartel prosecutions during the period 1969-2013. This period has seen substantive policy innovations with increasing penalties related to fines and jail terms. There appear to be four distinct cartel policy regimes: pre-1978, 1978-1992, 1993-2003, and 2004-2013. Our empirical estimates show significant variation in the number of cartels prosecuted and the penalties imposed across the policy regimes. The more recent regimes are characterized by far fewer cartels prosecuted, but with substantially higher penalties levied on firms and individuals. While effective deterrence is one explanation for these patterns, we are more inclined to conclude that US cartel enforcement has seen an underlying shift away from focusing on smaller cartels to larger and multinational firms. In terms of political effects, our results reveal no clear inter-political party effect on cartel prosecutions, but there appear to be interesting intra-political party effects. We find that particular Presidencies matter for cartel prosecutions, and variation across Presidential administrations led to marked shifts in the total number of cartels prosecuted. Overall, the shifts in the number of cartels prosecuted and penalties levied portray changing policy priorities and a search for the optimal enforcement design to curtail one of the clearest sources of welfare loss, collusion.

The impact of monetary policy in the midst of big shocks

This paper studies the impact of Federal Reserve policies that created the largest deviations from price stability during the Fed׳s first 100 years: the post-World War I deflation, the deflation of the Great Depression, the inflation of World War II, and the Great Inflation of the 1970s. In terms of their macroeconomic impacts, I find that deflation was uniquely depressing in the 1930s because of cartel policies that prevented nominal prices and wages from adjusting to clear markets, and not because deflation is generically depressing. I find that the biggest impact of monetary policy during World War II was in debasing debt through inflation. I find that the main drivers of the 1970s economy were long-run changes in productivity and the labor market, and that there may have been little that the Fed could have done at this time to expand employment and output. More broadly, I find that macroeconomic performance would have been better over the Fed׳s first century had the Fed followed a monetary policy to deliver stable prices.

Reconstructing the International Cartel Enforcement Framework: Theoretical Possibilities and Pragmatic Alternatives

This paper will argue that, considering the massive growth of international cartels, competition agencies need to rethink the way that they investigate and enforce their antitrust laws. In particular, it will argue that there should be a type of global network that provides a legislative framework for common leniency applicants and the free flow of information sharing. Unfortunately, the current legal barriers to information sharing and the distinctive issues faced by developing competition agencies suggest that a Global Competition Network (GCN) is unlikely. Therefore, a pragmatic alternative to creating a GCN would be to create Regional Competition Networks (RCN) with a global forum to discuss international cartel investigations and policy.

The Deterrent Effect of Anti-Cartel Enforcement: A Tale of Two Tails

Very little is known empirically about deterred cartels. Therefore, although the characteristics of detected cartels are well documented, it is unclear that they are a representative sample. If deterred or undetected cartels differ systematically from the detected, many of our conventional empirical wisdoms could be subject to sample selection bias. Similarly, the impact of cartel policy, based only on prosecuted cases, could be systematically under-estimated. This paper addresses this gap in our knowledge, and explores how far a key characteristic - the overcharge - differs between deterred and undeterred cartels. First we examine an existing well-known database on cartels and find that the distribution of overcharge for legal cartels has significantly greater mass in its tails than the distribution for illegal cartels. Taking legal cartels as a proxy for a world without enforcement policy, this suggests that it is the lowest and highest overcharge cartels which are most likely to be deterred, or undetected, by cartel enforcement policy. Second, we summon a theoretical model of cartel formation to show that, under very reasonable assumptions, it is deterrence that explains the reduced occurrence of low and high overcharge cartels when faced with antitrust enforcement.

Effects of different cartel policies: evidence from the German power-cable industry

We analyze the effects of cartel policies on firm behavior using data from the German power-cable cartel. Antitrust authorities affected the cartel under two different legal regimes: penalizing the cartel in some years, and exempting it for 10 years from the general cartel prohibition. While penalties did not reduce prices or profits, making collusion legal raised profits by at least 16% each year, compared with the time when the illegal cartel was not prosecuted. The threat of penalties was sufficient to reduce profit from collusion. The intended efficiency gains from rationalization, which was the justification for legalizing the cartel, did not materialize.