Proposed provisions for multilateral rules on hardcore cartels

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Proposed provisions for multilateral rules on
hard-core cartels

• Simon J. Evenett
• World Trade Institute
• simon.evenett_at_wti.org

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Outline of presentation

• Relevant context for the proposals since 1993 a
  surge in domestic and international cartel
  enforcement in many nations
• Proposals for multilateral rules on hard-core
  cartels and reactions to them
• Relationship to the multilateral framework on
  competition policy

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Surge in cartel enforcement since 1993

• Occurred in both developing and
  industrialised economies
• Involved prosecutions of both domestic and
  international cartels
• Victims have included consumers, companies, and
  governments
• Some details follow...

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More than 20 developing countries have taken
action against cartels in recent years

• These countries are found in every continent and
  at every stage of development
• A quarter of cases are bid-rigging cases
• Some cases have involved essential commodities
  with direct impact on poverty
• Cartel enforcement is not the preserve of rich
  countries

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International cartels prosecuted since 1993

• Prevalence (at least) 39 cartels
• Diverse membership 31 economies (including 8
  developing economies).
• Duration 24 cartels lasted at least 4 years.
• Overcharges on imports are not just the only
  adverse effect on developing economies.
• Exports are reduced too.
• Technology transfer slowed down also.

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The international vitamins cartel

• Worldwide cartel, 1989-1999
• US Federal authorities took action in 1999
• US fines exceeded 900 million EU fines of a
  similar magnitude
• How large were the overcharges? For 90 countries,
  the total estimated overcharges during the 1990s
  was just under 2.75bn

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Vitamins cartel targeted nations without active
cartel enforcement
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Proposals for multilateral rules on hard-core
cartels
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Commentary on these proposals

• Case for proposals
• Jurisdictions that do not enforce (or do not
  have) cartel laws create safe havens for
  international cartels to organise and operate.
• Under-enforcers damage customers in trading
  partners you cant isolate the harm done

• Concerns about proposals
• Cartels are unstable or can be undermined by open
  borders
• Sectoral regulation is an alternative
• Cartel enforcement is costly
• Expertise required

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Proper implementation of HCC provisions requires
other elements of the multilateral framework
Hard core cartels
Core principles Transparency Procedural
fairness Non-discrimination
Voluntary cooperation
Technical assistance and capacity building
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Proper implementation of HCC provisions requires
other elements of the multilateral framework
Hard core cartels
Core principles Transparency Procedural
fairness Non-discrimination
Voluntary cooperation
Technical assistance and capacity building
13
Proper implementation of HCC provisions requires
other elements of the multilateral framework
Hard core cartels
Core principles Transparency Procedural
fairness Non-discrimination
Voluntary cooperation
Technical assistance and capacity building
14
Proper implementation of HCC provisions requires
other elements of the multilateral framework
Hard core cartels
Core principles Transparency Procedural
fairness Non-discrimination
Voluntary cooperation
Technical assistance and capacity building
15
Proper implementation of HCC provisions requires
other elements of the multilateral framework
Hard core cartels
Core principles Transparency Procedural
fairness Non-discrimination
Voluntary cooperation
Technical assistance and capacity building