The Increased Importance of Economics in Cartel Cases

Abstract

The last two decades have seen a significant amount of actual or alleged cartel conspiracies uncovered, particularly in the financial sector, such as the discovery of the LIBOR rigging and the Foreign Exchange rigging, among others. Actual and potential wrongdoers realized that their emails and text messages can, in fact, be uncovered and used against them, and thus learned not to leave such a record of direct evidence behind again. In addition, coordination among competitors either through a hub or through third parties seems to be emerging more frequently than in the past, and in such settings, we naturally expect less evidence of direct communications between horizontal competitors. Direct evidence is therefore likely to be less prevalent in cartel matters moving forward. Instead, circumstantial evidence, along with economic evidence, will play an increasing role. This extends not only to calculating the effects of the alleged collusive scheme, but also to assessing the reasonableness attributing the conduct to collusion rather than independent unilateral conduct. This paper provides a general overview of why and how economic analyses can be important in cases involving alleged conspiracies particularly when direct evidence is lacking, and also in hub and spoke conspiracies.

Keywords: Collusion, conspiracies, cartels, economic evidence, hub and spoke conspiracies

JEL Classification: L41, K14, K21