International Cartel Enforcement: Lessons from the 1990s

Abstract

Enforcement against international cartels surged in the late 1990s. Despite this enforcement activity, there are good reasons to doubt that national laws sufficiently deter cartel formation.

The enforcement record of the 1990s shows that private international cartels are not defunct - nor do they always fall quickly under the weight of their own incentive problems. Of a sample of 40 such cartels prosecuted by the United States and the European Union in the 1990s, 24 lasted at least four years. And for the 20 cartels in this sample where sales data are available, the annual worldwide turnover in affected products exceeded $30 billion.

National competition policies address harm in domestic markets, and in some cases prohibit cartels without taking strong enforcement measures. Evenett, Levenstein, and Suslow propose a series of reforms to national policies and steps to enhance international cooperation that will strengthen the deterrents against international cartelization. Furthermore, the authors argue that aggressive prosecution of cartels must be complemented by vigilance in other areas of competition policy. If not, firms will respond to the enhanced deterrents to cartelization by merging or by taking other measures that lessen competitive pressures.

This paper - a product of Trade, Development Research Group - is part of a larger effort in the group to understand the consequences of national competition policies in a globalizing world. The authors may be contacted at [e-mail], [e-mail], or [e-mail].