Wednesday, December 12, 2007
Posted by D. Daniel Sokol
Cartel maven John Connor of Purdue's Department of Agricultural Economics has some new and important empirical work on cartels in Asia titled Global Antitrust Prosecutions of International Cartels: Focus on Asia.
ABSTRACT: International cartelists today face antitrust investigations and possible fines in a score of national and supranational jurisdictions. This paper aims at providing quantitative information about the size and impacts of international cartel activity in Asia and uses a sample of modern private cartels to evaluate the relative effectiveness of three prominent Asian antitrust authorities. The sample consists of legal and economic information on 377 international cartels discovered in Asia and the rest of the world during 1990-2007.
The need for assertive anti-cartel enforcement in Asia is demonstrated by the large affected commerce and economic injuries of known international cartels. Affected sales of the 27 Asian-region cartels exceeded US$155 billion. In addition, 86 global cartels also fixed prices in Asia. Affected sales in Asia from discovered cartels both types totals $300 to $400 billion. The overcharges Asian consumers were at least $94 billion in 1990-2007.
While more than US$35 billion in penalties has been imposed world wide, it is doubtful that such monetary sanctions can deter modern international cartels. The three with the most consistent legal responses to global cartels are the United States, Canada, and the EU. Yet, optimal cartel deterrence is frustrated by the failure of compensatory private suits to take hold outside of North America and the low fines in most Asian jurisdictions. Of the three selected jurisdictions, the Korean FTC has the best record of anti-cartel enforcement in Asia, but even the KFTC's surcharges are recouping less than 15% of damages. Without significant increases in cartel detection, in the levels of expected fines or civil penalties, or expansion of the standing of buyers to seek compensation, international price fixing will remain rational business conduct