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Levin College of Law

Tuesday, May 17, 2011

Angus MacCulloch Blog Symposium Comments on Criminalising Cartels: Critical Studies of an International Regulatory Movement

Posted by Angus MacCulloch

Reading through the material in Caron and Ariel's excellent collection of essays has given me a great deal or food for thought. As it would be impossible to do justice to the wealth of content in all twenty chapters I want to try and focus on a number of themes that seem to feature across a number of the contributions - I also make no apology for focussing on issues that have been troubling me of late. The three themes I want to address are 'Complexity', 'Culture', and 'Consensus'.


It is clear from a study which takes an explicitly critical approach to cartel regulation that the few comfortable legal assumptions which have grown up and shaped much contemporary competition, or antitrust, law dealing with cartels are on shakier foundations than many of us, who have plied our trade in the field, are happy to admit. Ever increasing enforcement activity, greater resources, and improved tools do not appear to be deterring the formation of cartels or even hastening their demise (notwithstanding the inherent difficult in measuring the 'dark figure', as characterised by Harding, of undetected activity). I would not describe the last decade's activity as a failure; in many ways it has been successful in its own terms by catching and punishing more cartelists than ever before. What is clearly in question is whether a punitive approach, with criminalisation being the punitive standard bearer, is ever likely to be *the* solution to the cartel problem? Several contributions to the book, particularly but not exclusively those in Part E, indicate the complexity of the issues that face us as we move away from the traditional enforcement orthodoxy. As we strive to better understand cartels it may mean that the regulatory response will have to become more sophisticated and nuanced.


Turning more specifically to the move toward criminalisation itself the essays in Parts B, C and D of the book highlight for me one of the key impacts of the turn to the criminal law to further competition policy goals. That is the very different national legal 'cultures' of criminal law that exists in different jurisdictions. Comparative law has long warned about the difficulty of legal transplants and cartel criminalisation is another good example. It may be possible to argue that there is a consensus (more on that in a moment) that cartels are bad, and something should be done about them; however, it is clearly more difficult to conclude that the actions of a cartelist are clearly criminal and deserving of harsh (in comparison to 'real' crimes) punishment. It appears to be the case that jurisdictions which have successful criminalisation of cartel-type activity, for example the US and Germany, do so because their domestic legal and social 'cultures' already see that activity as wrongful and morally deserving of punishment.

This creates a difficult 'chicken or egg' dilemma for other jurisdictions, like the UK, where there is an engaged political and legal 'elite' who wish to criminalise cartel behaviour, but there is little apparent appetite or understanding for such course in the business community or amongst the wider public.


Can the apparent enforcement consensus which appears to have developed in recent years survive these challenges - and the challenge of moving beyond its Anglo-American/Commonwealth heartland? As Stephen Wilks contribution discusses there may be a form of post-Chicago orthodoxy/hegemony at the forefront of contemporary debate, but the move towards criminalisation is a challenge even to that. As I have already noted the differing legal 'cultures' approach to cartel criminalisation means that different jurisdictions which do decide to criminalise are likely to have varying responses to the technical process of criminalisation. That variation may appear to be a breakdown of whatever consensus there is, but it may also be seen as steps towards the building of a new consensus (as Ezrachi and Kindl indicate is through various 'soft law' processes). It may also make it easier for jurisdictions with vigorous criminal enforcement to play a clear global role by making extraterritorial enforcement of their domestic law easier (through improved cooperation and extradition arrangements).


From work such as this it is increasingly clear that while there may be a trend toward increased use of criminal sanctions against cartel behaviour there are still a great many unanswered and troubling questions that lie behind it. The advocates of cartel criminalisation should take care to ensure that if they are seeking to encourage a jurisdiction to move towards the introduction of a cartel offence they pay heed to the specific legal and social conditions of that jurisdiction and make sure that the offence properly 'fits' in that enforcement landscape. The troubled UK cartel offence stands as a useful example of what can happen when political and technical desire runs ahead of wider public and business acceptance, and enforcement capacity. I would not like to be seen as being too negative in these comments, as I do see the process towards the greater use of criminal sanctions as being generally positive. But I do feel that it is important that we do not find ourselves in a position whereby a rush towards criminalisation damages the important steps towards the effective regulation of cartels that have been taken through other, less contentious, means.

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