Tacit Collusion: Theory and Case Law in Argentina, Brazil, Chile, Colombia and Panama (1985-2008)

Abstract

The predominance of oligopolies in Latin American (Latam) markets poses an important challenge for competition authorities (CAs). In the first place, CAs must enforce competition laws in markets where it is difficult to distinguish between conducts originated on collusive agreements among competitors from the behavior of interdependent firms that take unilateral decisions to adapt to the conditions of the market or anticipate their competitors’ decisions.

In the second place, price-fixing cases based on circumstantial economic evidence are very complex and the proceedings are costly to carry out. The latter implies high administrative costs of enforcement and risks of enforcement errors, either by sanctioning legitimate oligopolistic behavior (false positives) or by failing to detect true anticompetitive practices (false negatives).

The objective of this document is to present a thorough account of the cases adjudicated in five Latam’s jurisdictions in the period 1985-2008, analyze the evolution of the case law, and compare and contrast the rules and their enforcement under the spectrum of economic theory and the rules applied by other jurisdictions, such as the US (federal level) and the EU.

Keywords: tacit collusion, conscious parallelism, cartels, oligopolies, oligopolistic interdependence, price fixing, market division, bid rigging, collective dominance, indirect evidence, circumstantial evidence, plus factors, competition laws in Latin America and the Caribbean

JEL Classification: K21, L4, N46