Hard-core Cartels Research Articles

Sustainability Agreements and First Mover Disadvantages

Abstract This article presents a model where the managers of two firms decide about adopting a sustainable production technology (or product). It demonstrates under what conditions a firm experiences a first mover disadvantage from going green, which may potentially be overcome by a sustainability agreement serving as a device for equilibrium selection in a coordination game with multiple equilibria. If the technology adoption game is, however, a prisoner’s dilemma, the sustainability agreement must be structured like a hardcore cartel.

CRIMINAL CARTEL OFFENCE IN THE UK 10 YEARS AFTER THE AMENDMENT. EFFECTIVE REFORM OR FURTHER IMPEDIMENT TO PROSECUTION?

The article describes the operation in practice of UK regulations that stipulate grounds of criminal liability for the cartel offence for which the court may impose prison sentences and/or fines under the Enterprise Act 2002. Particular attention is paid to assessing the changes to the description of this offence introduced by the Enterprise and Regulatory Reform Act 2013, which came into force on 1 April 2014. The first fundamental change to this description was to eliminate the element of “dishonesty” in the description of the cartel offence. That change was due to the difficulties involved in proving the “dishonest” nature of the actions of those alleged to have committed the act. Most of the subsequent proceedings involving cartel conspiracies, even when hard-core cartels were alleged, crashed against these problems. The second fundamental change was the introduction into the cartel offence regulation of three types of circumstances giving grounds for finding that an act does not constitute an offence and three possible “defences” against allegations of the cartel offence. The article assesses to what extent these new regulations are able to ensure in practice an effective fight against cartel offences and to what extent they constitute a further impediment to this task. The article also describes the director’s disqualification measure applied under the Company Directors Disqualification Act 1986.

Collusion as Environmental Protection—An Economic Assessment

Abstract This article examines the relationship between the environment, sustainability, and European competition law. It shows that the European Commission’s decisional practice not to exempt anticompetitive agreements under Article 101(3) TFEU is because it selectively prosecutes hardcore cartels. The alleged ‘sustainability gap’ in EU antitrust is, therefore, more apparent than real. It is also shown that the Commission has adopted an efficient enforcement approach given the institutional and budgetary constraints it faces. On the other hand, the Commission’s guidelines on Article 101 TFEU lack coherence and consistency with its overarching Treaty obligations. The pros and cons of expanding Article 101(3) TFEU to take account of the third-party environmental and public policy factors are examined.

Cartel behaviour and efficient sanctioning by criminal sentences

ABSTRACT Hardcore cartels risk receiving both administrative fines from the cartel authority and civil law claims for damages. There is a legal policy discussion that cartelist should also face criminal law consequences. Penalties must be at least as high as expected benefits to deter crimes. Sanctions by the German cartel office might indicate information on the profits We calculate the minimum level of fines required to deter cartel infringement for each case, and compare the figures to the actual penalties. The calculated minimum penalties would result in a considerable increase in fines, which would have to be covered either by compensation payments, or criminal sanctions. If custodial sentences were based on the probability of zero compensation payments, and the monetary loss of benefit, the result would sometimes equal an impractically long criminal sentence. It would be more effective to raise administrative sanctions to a sufficient level, especially against individuals.

Collusion as Environmental Protection - An Economic Assessment

This article examines the relationship between the environment, sustainability, and European competition law. It shows that the European Commission’s decisional practice not to exempt anticompetitive agreements under Article 101(3) TFEU is because it selectively prosecutes hardcore cartels. The alleged ‘sustainability gap’ in EU antitrust is therefore more apparent than real. It is also shown that the Commission has adopted an efficient enforcement approach given the institutional and budgetary constraints it faces. On the other hand, the Commission’s guidelines on Article 101 TFEU lack coherence and consistency with its overarching Treaty obligations. The pros and cons of expanding Article 101(3) TFEU to take account of the third-party environmental and public policy factors are examined.

Characterizing Hard Core Cartels Under Article 101 TFEU

The prohibition of cartels embodies arguably the sole universal norm of global competition law. Yet a precise understanding of what constitutes a cartel remains elusive, a problem that is exacerbated in the context of Article 101 Treaty on the Functioning of the European Union by the Commission’s administrative enforcement procedures and the expansive approach to the “by object” category of restraints. This article aims to provide a more precise characterization of the hard core cartel concept as reflected in EU competition case law and practice and to explore why such conduct continues to constitute the “supreme evil” of contemporary antitrust enforcement.

El intercambio de información entre competidores y su tratamiento en el Perú

The exchange of information has been evaluated by jurisprudence and comparative widespread doctrine through the rule of reason and, in some cases, as an independent behavior. In 2011, the European Union established specific regulations for such issue and ordered the analysis of the rule of reason in the context of a horizontal collusion case. However, in Peru, the exchange of information has been analyzed through the per se rule when it presented in the research framework of a hard-core cartel, which rather served as an evidence of a collusive hypothesis: a more accurate interpretation according to Peruvian legislation.

Revisiting the Imprisonment Sentence under the Egyptian Competition Regime

This article addresses the Egyptian competition regime’s adoption of type II errors (under enforcement) in hardcore cartel cases. This article provides an analysis of the Egyptian Cement Cartel Case, and draws general conclusions drawn from it. This article explores the extent to which the fine imposed in the aforementioned case (the maximum fine at the time) was sufficient enough to recoup the cartel’s overcharges and to create the necessary deterrence effect for future anticompetitive practices in general and from creating cartels in particular. This article further explores an alternative approach to addressing concerns about the adequacy of a fine sentence in light of the applicability of an imprisonment sanction impeded within the Egyptian Penal Code. Moreover, this article examines the limits of this alternative approach, and how it could be practically enforced by Egyptian courts. Interviews with senior judicial figures in the Egyptian legal system were conducted to explore the applicability and limitations of the imprisonment approach. The assessment is not limited to qualitative data, however, but also encompasses quantitative data to further support the findings. As a result, it was found that imprisonment sanctions would eventually result in better enforcement policies. That is to say that fines were found not to be the optimal sanctioning mechanism since they are either extremely low or impossibly high.

Collusion: Is it Really that Bad?

Collusion, particularly collusion is in the form of hardcore cartel behavior, is the worst antitrust offense of all. People engaging in such conduct should be punished severely. That is the consensus among antitrust officials. I argue against, that collusion is not that bad as antitrust officials want to make us believe. Colluders are just people of the same trade trying to avoid the race to the bottom which competition implies for them. Moreover, they do it in a way that is hard to prohibit in a free society under a rule of law. In my judgement, the prohibition of horizontal agreements in modern antitrust regimes and, even more so, the way it is enforced, generate substantial legal uncertainty. That way, they undermine the credibility of the institutions and bend the rule of law to its breaking point.

Competition policy and its importance for the economy

The article analyzes and discusses topics such as competitition and it’s importance for markets. Competition is a cornerstone of our economic and social order. The fact that competition leads to the best overall economic results is now undisputed in most economies around the world. Effective competition encourages businesses to push forward. They must make an effort to win customers. As a consequence, consumers can benefit directly from better quality at lower prices. Competition Agencies increased the effectiveness of their cartel prosecution efforts, for example by establishing specialized anti-cartel divisions, revising their leniency programme and lauchinannonymous whistle-blowing system. High-level fines can only gave a deterrent effect if the cartel members have reason to expect that their cartel activities will be uncovered. The leniency programme as one of the sources available for uncovering anti-competitive agreements this also has a strong deterrent effect. Cartel members must expect at all time that one of them might have reported the illegal agreements to the competition authorities. The prosecution of illegal hardcore cartels [1] is of key relevance for effective competition protection and, as such, has a direct positive effect in the economy and costumers. Cartels cause great harm to the economy because they lead to higher prices, lower product quality and less innovation. This harm can only be prevented if cartels are effectively prosecuted. Also, anti-competitive agreements lead to excessive prices coupled with inferior product quality. At the same time the elimination of competition undermines the innovative power of businesses.Cartels thus hurt the economy as a whole and the consumer in particular. The motivation to study competition policy and its importance for economy is step to introduce more economic possibilities and partnerships in our developing world.

Failed WTO Platform for Competition Law Convergence: Evolving Alternate Regime of Mous on Internationalization of Competition Law

In July 2004, the Working Group on Interaction between Trade and Competition Policy at WTO was made inactive post decision by General Council at Cancun as the proposal to have a formal multilateral framework to enhance the contribution of competition policy to international trade and development agreed to at Doha could not be taken forward. WTO Platform could not be an appropriate forum for having international competition law regime because of the inherent conflict between national competition legislations and international trade principles. For example, in cases of export cartels, while the national trade measure by a country may be perfectly right, under WTO scene, it facilitates anticompetitive conduct. Further, the conflict between developed and developing countries posed another problem. However, international business requires convergence on at least basic principles of competition law which was attempted by UNCTAD long back in 1980s by proposing a Model Law on Competition which is still being negotiated. WTOs failure led to evolution of the regime of MOUs in which the countries entered into soft agreements in the nature of bilateral (EU-US 1991 agreement), multilateral (ICN, OECD), and regional (ASEAN) including the recent class of Free Trade Agreements (India-EU FTA). This evolution has given rise to a fresh concept of internationalization of competition law which aims towards convergence. The International Competition Network (ICN) has further evolved as a specialized though informal venue for about 120 plus competition agencies to thrash out completion principles aiming towards convergence. The present paper seeks to trace this evolution and evaluate the present position in this regard. The paper would be divided into four parts. The first part would provide an introduction and historical background to internationalization of competition law. Second part would deal with WTO work. The third part would discuss the bilateral MOUs and the fourth part would delve into the newer forms of platform leading to convergence. The paper would seek to assess how far these platforms have been successful in achieving convergence especially in view of hard-core cartels and some of the latest trends of extraditing the violators of competition law across countries like Ian Norris.

Rationale and Benefits of Leniency Programs Under EU Competition Law and US Federal Anti-Trust Law

The main focus of the Competition Laws and Antitrust Laws is to keep consumer welfare at optimal level ensuring best quality of products and services at the lowest possible prices. However there are various anti-competitive behaviors flourishing in the markets that bring down the principles of free market economy. Amongst these hard-core cartels, simply read as cartels, are considered as the most serious and egregious violations of competition laws. Taken that it is extremely hard to detect, apprehend and punish cartels and their conspirators, leniency program has been proved to be very effective in many jurisdictions.

Reflections on Leniency Programs: In Search for Effectiveness

Competition law’s main objective is to maximize consumer welfare by ensuring the competitive functioning of the markets. In particular, competition law has to address anticompetitive agreements between competitors or firms at different levels, abusive behaviour of dominant firms, mergers and public restrictions of competition. This paper will focus on hard-core cartels considering that they are the most serious violation of competition law. The instruments used to fight against this anticompetitive behaviour (leniency programs) have resulted to be fairly effective. Many modifications and developments have taken place since the leniency program was first established in the European Union in order to make it an optimal tool to fight hard-core cartels. However, it is submitted that a significant margin of improvement remains for several features of the program. Discussion throughout this paper about the pitfalls of this leniency system will remark the need for further changes enabling these programs to become the ultimate solution against hard-core cartels. The thesis concludes with a study case of the Spanish competition law that will reflect the strengths and weakness of the leniency programs in the practice.

Imprisonment for Hard Core Cartel Participation: A Sanction with Considerable Potential

Imprisonment for Hard Core Cartel Participation: A Sanction with Considerable Potential

Reviewing Arbitration Awards for Competition Law Violations

This article discusses the risk that international arbitration awards violating national competition laws will be enforced without having received reasonable scrutiny either during arbitration or in the national courts.The risk that competition law violations may be authorized under the guise of enforceable arbitration awards is real, and it is a major policy problem. It is quite easy, for example, to use the international arbitration framework to enforce agreements that authorize anticompetitive activity among competitors in jurisdictions unrelated to the arbitral award (i.e., without power to review it). The problem is that competition law violations in jurisdictions unrelated to the award are unlikely to raise red flags. This is true from the perspective of both international arbitrators and national courts. Arbitrators generally will not raise issues ex officio unless they bear on enforceability of the award. For their part, national courts have thus far not interpreted violations of the competition laws in foreign jurisdictions as potential bars to enforcement.The key to solving this policy problem is getting international arbitrators to identify at least the most serious types of competition law violations – which are the most likely to be deliberately omitted from the issues presented in the arbitration – on their own initiative.To solve this problem, this article recommends that national courts implementing the New York Convention begin to recognize a narrow category of hard-core cartel activities (e.g., price fixing, bid rigging, agreed-upon output restraints, and territorial market allocation, which are universally condemned under national competition laws) as “international public policy.” Doing so will give international arbitrators the incentive to look for and resolve at least the most severe types of competition law issues in order to ensure that they are rendering an enforceable award.That recommendation, while ambitious, does not imply a heightened standard for judicial review or a departure from the prompt enforcement procedures that courts ought to use under the New York Convention. This article maintains that national courts cannot and must not re-decide issues of fact and law already decided by international arbitrators. But it suggests that national courts should consider it a prerequisite to recognition and enforcement that international arbitrators have taken note of and decided at least the most severe types of competition law issues if they are alleged in court during annulment or enforcement proceedings. If national courts do this, they can create an environment in which universally-recognized principles of competition law are upheld in international arbitration. If they do not, there is a serious risk that international cartel activities may trample competition law enforcement around the world and make global markets less efficient.

Anticompetitive Behaviour of Undertakings - Case Studies

European Union's competition rules apply to all entities developing economic activities within the Member States. Companies whose market behaviours do not comply with EU regulation regarding competition rules take the risk to be fined and face the negative consequences of their actions (the legal actions of those affected by anticompetitive practices; image injuries, both connected to trade partners and to their customers and so on). Cartels as well as the arrangements between competitors do represent violations of competition law and they are always under the monitoring of competition authorities. Among the cartels, the most damaging for the development of a normal competitive environment, are the so-called “hard core cartels” which could be the price fixing cartels, the output restricting cartels, those of market sharing or of participation in bid rigging. The aim of this research paper is to present the main legal issues concerning the competition law as well as three case studies on anticompetitive practices in terms of cartels as they appear at the European Union's level.

Cartels Portrayed: U.S. vs. EC: Who's Winning the Prosecution Race? A 21-Year Perspective, 1990 to 2010

The following charts illustrate the global size and economic impacts of the modern international cartel movement and the enforcement responses of the world’s antitrust authorities and national courts. The sample encompasses 640 private hard-core cartels that were subject to government or private legal actions (i.e., formal investigations, damages suits, fines, or consent decrees) between January 1990 and December 2010. Each cartel had participants with headquarters in two or more nations. The sample is believed to be a reasonably complete list of all contemporary private international cartels discovered by jurisdictions with an active press or informative antitrust-authority Web site. All monetary data are expressed in nominal U.S. dollars using exchange rates during the cartel’s life or on the day a legal action was announced. A special effort is made to create charts that illustrate trends in cartel dimensions and antitrust decisions.

Leniency Programs in Latin America: 'New' Tools for Cartel Enforcement

The fight against cartels has become a central feature for many competition agencies. In Latin America, this fight is long overdue as the prevalence of cartels has historically harmed competition in both large and small markets. The introduction of immunity and leniency programs to fight hard-core cartels is an important challenge for many authorities in the region. They have to garner the necessary expertise to administer these programs, increasingly join and even cooperate with their international counterparts, and learn the nuances in their legal systems when implementing them and enforcing their competition legislation. Nonetheless, these programs have proven to be extremely effective, low-cost tools that have uncovered a number of cartels in a relatively short period of time.We present some information on the differences among these programs in eight Latin American countries and discuss some of the advantages and challenges that each have faced in using this tool to investigate cartels. While we note that increases to monetary fines and sanctions would improve the effectiveness of these programs, we also believe that, on their own, there is room for leniency programs to grow and become more effective for antitrust agencies in Latin America.

The Role of Private Enforcement within EU Competition Law

Private enforcement is an increasingly prominent and important aspect of EU competition law. The impending Directive on damages actions aims to strengthen and, to a degree, harmonise procedures for private competition litigation, while recent cases of the Court of Justice have consistently reaffirmed the centrality of the right to claim competition for losses stemming from breach of the competition rules. Moreover, this right has been presented as an essentially unitary one, whereby any victim of any type of competition infringement has, in principle, the right to claim damages. This article reviews the evolving framework, and considers, specifically, the role for private enforcement within the overall system of EU competition law. Taking into account the Commission’s efforts to facilitate and increase private enforcement, the emerging EU public enforcement framework, as well as the substantive EU competition rules more generally, this article argues that, contrary to the rhetoric, private enforcement is a mechanism best adapted, and arguably most appropriate, for use only in the context of hard-core cartels. It is further suggested that the gap between rhetoric and reality is not problematic as such, yet difficulties may arise insofar as these divergences conflict with the principle of effectiveness.

Price-Fixing Overcharges: Revised 3rd Edition

This paper surveys almost 600 published economic studies and judicial decisions that contain 1,517 quantitative estimates of overcharges of hard-core cartels, of which 8% are zero. The primary finding is that the median long-run overcharge for all types of cartels over all time periods is 23.3%. The median overcharge for international cartels (30.0%) is significantly higher than for domestic cartels (17.2%). Cartel overcharges are negatively skewed, pushing the mean overcharge for all successful cartels to 50.4%. Convicted cartels are on average slightly more effective at raising prices as unpunished cartels, whereas bid-rigging conduct displays lower mark-ups than price-fixing cartels. Because some jurisdictions fine illegal cartels on the presumption of a 10% overcharge, these averages suggest that penalty guidelines aimed at optimally deterring cartels ought to be increased.