The War on Cartels and the Social Meaning of Deterrence

Abstract

The global war on cartels has had much success in introducing tough sanctions for cartel conduct, such as price fixing and market sharing. The policy rhetoric justifying criminalization assumes that compliance can be induced through deterrence. This in turn assumes that business people know about the law, believe that they are likely to be caught and face enforcement action and jail if they break the law, and calculate that they should comply. This paper problematizes these policy assumptions using evidence from a survey of a random sample of Australian business people and in-depth interviews with 25 cartelists. This paper argues that business people’s knowledge about the law is less important than their relationship with (or distance from) the law. Corporate elites see themselves as intimate with the law and therefore able to strategically ‘play’ the law; while small business people and managers lower down the corporate hierarchy see themselves as ‘innocent’ of any knowledge of the law. The impact of a policy of increased sanctions for misconduct cannot be understood solely in terms of marginal difference in aggregate levels of deterrence. It must also be understood in terms of how it interacts with people’s experience of the law to create and maintain or contest and destabilise social segmentation and inequality.

Keywords: antitrust, cartels, deterrence, regulation, compliance, trade practices, australian competition and consumer commission, price fixing

JEL Classification: A14, D63