CARTELS & ANTITRUST PORTRAYED

:
PRIVATE INTERNATIONAL CARTELS, 1990-2008
John M. Connor, Purdue University
jconnor@purdue.edu December 20, 2008

Introduction
• The purpose of the following 80 charts is to illustrate the size and economic impacts of the modern international cartel movement and the enforcement responses of the world’s antitrust authorities and national courts. • The data employed encompass 495 private hard-core cartels that were subject to government or private legal actions (i.e., formal investigations, damages suits, fines, or consent decrees) between J January 1990 and dN November b 2008 2008. E Each h cartel t lh had d participants ti i t with headquarters in two or more nations. • All monetary data are expressed in nominal U.S. dollars using exchange rates during the cartel’s life or on the day a legal action was announced. • A special effort is made to create charts that illustrate trends in cartel dimensions and antitrust decisions.

OUTLINE
SLIDES

• • • • • • •

Part 1: Number, Size, and Industries Part 2: Cartel Detection Part 3: Internal Structures of Cartels Part 4: Corporate fines and Settlements Part 5: Individual Sanctions Part 6: Market Effects and Damages Sources

4-11 13-23 24-30 31-54 55-67 66-79 80

PART 1
• Numbers and sizes of cartels and their participants. • Industry characteristics

these presumptive “non-cartels” are omitted from most slides.Numbers of Cartels • Between Jan. 2008.) of suspected international cartels. 1990 and Nov. • Incomplete information is available on 96 (19%) because no adverse government decisions and no private settlements were made public. grand juries. . • Cases against 31 (6%) cartels were closed without sanctions because of insufficient evidence of a violation. et sim. class actions filed. there were 495 formal investigations (raids.

i li d b but are anonymous • Almost 2400 have been fined* * Some double counting of recidivists .Numbers of Corporate Cartelists • At least 5900 companies in total • About 2900 ultimate parent companies known by name and location* • About Ab 3000 more companies i implicated.

Numbers of Cartel Executives Fined or Imprisoned • At least 373 individual. named executives have been penalized • Hundreds more were guilty but given immunity • Thousands more were guilty but not prosecuted .

6 Trillion 8 7 6 5 4 3 2 1 0 EC EU NCAs US Other $ Trillion Nominal “EC” is cartels convicted by the Eur. Commission .Total Known Affected Sales by International Cartels Is $16.

1990-2008 16 14 12 10 8 6 4 2 0 1990-94 1995-99 2000-04 2005-08 $ Trillion Note: in $2008 dollars. . sales are at least treble the nominal (current) dollars shown.Huge Increases in Known Affected Sales by International Cartels.

9 145.0 264.Estimated Affected Sales of Some Recent (2005-08)International Cartels Cartel Name and Type Sales ($ billion) Airlines.0 131. Global Telecom. US & UK LCDs (Liquid Crystal Displays).0 74.5 .1 43. passenger. fuel surcharge . Korea Cleaning products. fuel surcharge . cargo. Global Insurance brokerage fees.Global Diamonds. US Airlines. TFP type. mobile services 2.0 96.164. home and personal. rough gem quality.0 303. Global Bank cards' fees. EU Tobacco products.2 285. UK 1.

GENERAL CARTEL INDUSTRIES • • • • • • 17 agricultural or mining raw materials 202 intermediate industrial materials 21 industrial capital goods 32 undifferentiated consumer goods 37 differentiated consumer goods 155 business or consumer services .

Distribution Cement.LEADING CARTEL INDUSTRIES No. Machinery Rubber & plastic Inorganic Chemicals Metals Telecom services Banking & Insurance Paper & printing 0 20 40 60 80 Number of cartels 1990-2008 100 120 . glass Transport services Construction Other services Instruments & Misc. graphite. Organic Chemicals Food & Tobacco Mfg.

Part 2: DETECTION .

So. . • Asia (=Korea) is becoming a cartel tiger. g. • The EU’s National Competition Authorities (NCAs) are now the biggest prosecutors.International Cartels Are Now Being Assaulted on All Fronts • Indictments in the US and Canada peaked in the late 1990s (with the 16 vitamins cartels playing a major role). • Of late. • The EC’s cases are rising. but without settlements the rise in numbers is small. Africa and Brazil are active also.

Rate of Discovery Are Eight Times Higher in 2005-08 50 49.3 Number detecte ed per year 40 30 20 10 6.2 0 1990-94 1995-99 2000-04 2005-08 Year of Discovery of All International Cartels .

0 “Global” cartels affected prices in two or more continents .6 Number per year 8.Rates of Discovery of Global Cartels Are Rising Slowly 9 8 7 6 5 4 3 2 1 0 1990-94 1995-99 2000-04 2005-08 1.

Rates of Discovery by the European Commission Rise Steadily 6 5 4 3 2 1 0 1990-94 1995-99 2000-04 2005-08 1.8 2.5 cartels .4 3.6 5.

Cartel Detections by the EU’s NCAs Surpass All Others since 2000 20 18 16 14 12 10 8 6 4 2 0 1990-94 1995-99 2000-04 2005-08 Detections .

Cartel Detections by the US and Canada Are Stalled 5 4.5 4 3.5 0 1990-94 1995-99 2000-04 2005-08 Detections .5 1 0.5 3 2.5 2 1.

Asian Anti-Cartel Enforcement (Especially Korea) Is Accelerating 9 8 7 6 5 4 3 2 1 0 1990-94 1995-99 2000-04 2005-08 Detections .

Cartel Detections in Africa and Latin America Are Modest but Significant 7 6 5 4 3 2 1 0 1990-94 1995-99 2000-04 2005-08 Detections .

More Companies Are Becoming Cartelists More than 2400 instances of corporate participation have been identified. and at least 1620 have been fined during 1990-2008. .Despite Heavier International Cartel Penalties.

Number of Corporate Cartelists Is Rising Number of corpora ate participations 2000 1500 1000 500 0 1990-94 1995-99 2000-04 2005-08 Year cartel was detected .

Part 3: Internal Structures of Cartels .

Number of Companies per Cartel Steady Average Number of co orporation/cartel 12 10 8 6 4 2 0 1990-94 1995-99 2000-04 2005-08 .

Number of Companies in Cartels. 1990-2008 Total 20 15 10 percent 5 0 2 3 4 5 6 7 8 Number of corporate participants 9 10 .

Duration of All International Cartels Falling 150 Months on average 102 100 83 63 50 57 0 1990-95 1996-99 2000-03 2004-07 .

Duration of Global-Scope International Cartels 150 141 Months on av verage 100 80 72 84 50 0 1990-95 1996-99 2000-03 2004-07 Note: Global cartels operated in multiple continents .

Duration of Regional Cartels 150 Months on av verage 100 72 50 73 83 59 0 1990-95 1996-99 2000-03 2004-07 Regional cartels operated in one jurisdiction .

Duration of International Cartels in Asia 150 Months on av verage 100 65 50 50 24 31 0 1990-95 1996-99 2000-03 2004-07 .

• The undisputed leader in fines – the DOJ – has been overtaken by other authorities. • Over 4300 companies investigated • Over 1500 companies penalized • Over 370 executives fined or imprisoned . authorities • EC fines exceeded the DOJ’s after 1999.PART 4 • Cartel fines and private settlements are about equal and exceed $60 billion combined.

Penalties on International Cartels Total $ 61.2 Billion (1990-2008) 35 30 25 20 15 10 5 0 Govt. Fines Private Settlements USD .

Penalties on International Cartels Are Surging 50 45 40 35 30 25 20 15 10 5 0 1990-94 1995-99 2000-04 2005-08 $ Billion .

Government Fines Imposed on International Cartels Total $ 32.9 Billion 18 16 14 12 10 8 6 4 2 0 EC NCAs Other US Canada $ Billion .

Penalties Are Rising in All Jurisdictions 25 20 15 10 5 0 $ Billion 2005-08 2005 08 2000-04 1995-99 1990-94 1990-94 1995-99 2000-04 2005-08 .

Number of Corporations Fined. Dept.S. of Justice. U. 1990-2008 80 70 60 50 40 30 20 10 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Domestic Intl .

U. Dept.S. 1990-2008 1300 1200 1100 1000 900 800 700 600 500 400 300 200 100 0 Total $5. of Justice.International Cartel Fines Collected.4 billion $ Million n 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Year First Member of Cartel Is Fined 2008 .

Dept. 1990-2008 800 700 600 500 Percent 400 300 200 100 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Fiscal years (DOJ) and calendar years do not match .S.International Cartel Fines/Total Collected. U. of Justice.

1990-2008 160 140 120 Percen nt 100 80 60 40 20 0 1990-94 1995-99 2000-04 2005-08 Fiscal years (DOJ) and calendar years (Intl.S. U.) do not match: FIX? .International Cartel Fines/Total Collected. of Justice. Dept.

European Commission.Number of Dec cisions 10 12 14 16 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Year of Decision 2 4 6 8 Number of Cartel Decisions. 1990-2008 Total 90 .

1990-2008 80 70 Number of Com mpanies 60 50 40 30 20 10 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Total 598 Firms Year of Decision .Number of Companies in European Commission Decisions.

Cartels. 1990-2008 16 14 12 10 8 6 4 2 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 EC DOJ [Add individual cases for US] . EC and DOJ.Number of Adverse Decisions about Intl.

Total $15.6 billion . European Commission. 1990-2008 4000 3500 3000 2500 2000 1500 1000 500 0 1990 1995 1996 1997 1998 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Year of Decision $ Mil. Cartel Fines Collected.Intl.

EC and DOJ Compared. 1990-2008 4000 3500 3000 2500 2000 1500 1000 500 0 1990 1995 1996 1997 1998 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Year First Member of Cartel Is Fined EC DOJ .International Cartel Fines Collected.

Total $6.2 billion .Intl. Cartel Fines Collected by NCAs (EU’s National Authorities) 1990-2008 1400 1200 1000 800 600 400 200 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Year of Decision $ Mil.

Cartel Settlements in the US 1990-2008 10000 9000 8000 7000 6000 5000 4000 3000 2000 1000 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Year of Major Settlement $ Mil. Total $26.4 billion .Intl.

Total International Cartel Penalties, EU and U.S. Compared, 1990-2008
12000 10000 8000 $ million 6000 4000 2000 0 1990 1995 1996 1997 1998 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 all EU all US

US total $32 billion EU total $22 billion

Other Government Fines on International Cartels Exceed $5 Billion
4000 3500 3000 2500 $ Millio on 2000 1500 1000 500 0 US AGs Korea Africa Latin America Other Asia Oceania

Most Private Cartel Settlements Are with Direct Buyers in the US
30 25 20 $ Billion n 15 10 5 0 US Direct US Indirect Canada Other

Over 4300 Companies Investigated
2500 2000 Number of Fines 1500 1000 500 0 1990-94 1995-99 2000-04 2005-08

At Least 94 Amnesties for International Cartels Granted 43 37 Number of Am mnesties 9 2 US EU Canada EU States 2 Asia .

Europe Lat America Lat.Corporate Cartelists Are from 57 Nations W. Nations Oceanea Africa US & Canada 0 3 6 9 12 15 18 NUMBER OF NATIONS . Europe Asia E.

11 0. Europe US & Canada Asia Africa Lat.7 11. European Companies W.38 0. Europe Australia 0.0 36.Corporate Penalties Are Mostly Paid by W.2 0.2 $ Billion Note : Western European international cartelists account for 66. . America E.3% of the total.05 6.

8% of the total of 1511.Most Penalized Corporations Are Headquartered in Western Europe US German French Italian Japanese Dutch British Korean Swiss Belgian Spanish Hungarian Swedish 0 50 100 150 200 250 NB : Western European cartelists account for 61. .

2% of the total of 1511. . America Africa Australia 18 16 44 50 217 251 NB : Non-Western European cartelists account for 38.Corporate Headquarters of Non-European Penalized Firms Number of Companies US & Canada Asia E. Europe Lat.

PART 5: Individual Sanctions • DOJ prison sentences are more severe • Fines on executives are insignificant .

International Cartels US Germany Australia Japan Egypt UK Israel So. Korea Netherlands Canada France 0 20 40 60 80 100 120 NB : Totals 374.Number of Executives Penalized by Nationality. including a few anonymous cartelists. .

(CHARGED) Poly. (PRISON) . (FINED) Poly.Number of Executives Charged and Penalized by the DOJ per Year 90 80 70 60 50 40 30 20 10 0 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 CHARGED FINED PRISON Poly.

(% FINED) Poly.Proportion of Charged Persons Fined or Imprisoned by DOJ 100 80 60 40 20 0 1990 1994 1998 2002 2006 % FINED % PRISON Poly. (% PRISON) Percent t .

US. Individual Price Fixers.Proportion Fined/Charged. 1990-2008 90 80 70 60 PERCENT 50 40 30 20 10 0 1990-94 1995-99 2000-04 2005-08 All Cartels International .

Individual Price Fixers.Proportion Imprisoned/Charged. 1990-2008 80 70 60 50 PERCENT 40 30 20 10 0 1990-94 1995-99 2000-04 2005-08 All Cartels International . US.

2001 2002 2003 2004 2005 2006 2007 2008 (NB: 2008 Workforce Stats due out early 2009) .Mean US Prison Sentences for All Price Fixers. 1990-2008 35 30 MONTH PE ER PERSON 25 20 15 10 5 0 1990s 2000 Avg.

US Prison Sentences for All Price Fixers.Mean Length. 1990-2008 35 MONTHS P PER PERSON 30 25 20 15 10 5 0 1990 1993 1996 1999 2002 2005 2008 .

1990-2008 45 MONTHS P PER PERSON 40 35 30 25 20 15 10 5 0 1990 1993 1996 1999 2002 2005 2008 NB: The median of 104 international cases is 10 months (2008 has partial data) .Mean Length. US Prison Sentences for International Price Fixers.

1990-2008 .LOG of $ ‘000 PER PERSON 10000 1000 100 10 1 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 All Cartels International Average US Fines/Person for Price Fixers.

Mean US Fines/Person for Price Fixers.000 . 1990-2008 900 800 $ ‘000 PER PE ERSON 700 600 500 400 300 200 100 0 1990-94 1995-99 2000-04 2005-08 All Cartels International Note: The median 1990-2008 international fine is $100.

1990-2008 700 600 DAYS PER PER RSON 500 400 300 200 100 0 1990-94 1995-99 2000-04 2005-08 All Cartels International .Mean US Prison Days/Person for Price Fixers.

000 . 1990-2008 900 800 $ ‘000 PER PE ERSON 700 600 500 400 300 200 100 0 1990-94 1995-99 2000-04 2005-08 All Cartels International Note: The median 1990-2008 international fine is $100.Mean US Fines/Person for Price Fixers.

Part 6 Market Effects and Damages • Data on price effects are incomplete .

Mean Penalties on Global Cartels. Relative to Affected Sales. 1990-2008 (%) 35 30 Penalties/Affected S Sales (%) 25 20 15 10 5 0 EU US Canada Private World Median Mean .

other zero dollar penalties EU US DOJ Private . warnings. Includes consent decrees.Severity of EU and US Median Penalties. Non-Global Cartels (%) 20 18 Penalties/Affected S Sales (%) 16 14 12 10 8 6 4 2 0 1990-94 1995-99 2000-04 2005-08 NB.

other zero dollar penalties . warnings.Severity of EU. US & Canadian Mean Fines. Includes consent decrees. Global Cartels 30 Fines /Affecte ed Sales (%) 25 20 15 10 5 0 1990-94 1995-99 2000-04 2005-08 EU US Canada NB.

other zero dollar penalties . US&EU NB.Severity of Median Private Settlements. warnings. Global Cartels 20 18 16 14 12 10 8 6 4 2 0 1990-94 1995-99 2000-04 2005-08 Penalties/Affec cted Sales (%) Private Avg. Includes consent decrees.

EU. warnings. US & Canada: Severity of Median Fines. Global Cartels 20 Penalties/Affec cted Sales (%) 18 16 14 12 10 8 6 4 2 0 1990-94 1995-99 2000-04 2005-08 EU US Private US NB. Excludes consent decrees. other zero dollar penalties .

Global Cartels 45 Settlements/Aff fected Sales (%) 40 35 30 25 20 15 10 5 0 1990-94 1995-99 2000-04 2005-08 Pi t Private Avg.Severity of Mean Private Settlements. US+EU NB. warnings. other zero dollar penalties . Includes consent decrees.

Excludes all zero-dollar penalties . Global Cartels 30 Fines /Affecte ed Sales (%) 25 20 15 10 5 0 1990-94 1995-99 2000-04 2005-08 EU US Canada NB.EU. US & Canada: Severity of Mean Fines.

Global Cartels 25 Penalties/Affec cted Sales (%) 20 15 Private 10 5 0 1990-94 1995-99 2000-04 2005-08 Avg.Severity of Median Private Settlements. US&EU NB. Excludes all zero-dollar penalties .

Excludes all zero-dollar penalties . US & Canada: Severity of Median Fines.EU. Global Cartels 18 16 Fines/Affecte ed Sales (%) 14 12 10 8 6 4 2 0 1990-94 1995-99 2000-04 2005-08 EU US Canada NB.

US+EU NB. Global Cartels (%) 45 Settlements/A Affected Sales 40 35 30 25 20 15 10 5 0 1990-94 1995-99 2000-04 2005-08 Pi t Private Avg. Excludes all zero-dollar penalties .Mean Private Settlement Intensities.

79 10 0 US DOJ Canada Excludes secret investigations EC Other Govt.56 20 19. All Cartels.3 30 36. 1990-2008 40 33.MEDIAN LAGS: From Investigation to First Sanction.41 Months 21. .

58 Months 25 20 15 10 5 0 US DOJ Canada EC 18. Excludes secret investigations .98 23.MEDIAN LAGS: From Investigation to First Sanction.76 Other Govt.75 32. Global Cartels. 1990-2008 40 35 30 37.

US DOJ.MEDIAN INVESTIGATION LENGTH.57 17.82 Months Year the first cartelist was fined . 1990-2008 35 30 25 20.15 32.98 20 15 10 5 0 1990-94 1995-99 2000-04 2005-08 8.

1990-2008 Share of Investigations Kn nown Before Decisions 100% 73% 61% 50% 57% 68% 0% U. DOJ Canada EC Other Europe .S.Transparency of International Cartel Investigations.

Washington. As of November 2008.] John M. is continuously updated.000 cells of data. Connor DOJ Cartel Enforcement 1990 1990-2007 2007. the combined (Full Data) spreadsheet was a file of 4. Statistics on Modern Private International Cartels: Working Paper 07-01. Private International Cartels: Full Data.pdf] John M. Cartel Amnesties Granted: Worldwide Whistleblowers SSRN Working Paper (October 2008). Connor. first created about 1998. [at SSRN: http://ssrn. [A spreadsheet created late 2007 and completed in early 2008.org/recent2/567.Sources • John M. There are also 13 back-up spreadsheets. DC: American Antitrust Institute (January 2007).com/abstract=1285469] • • • . Connor. Contains annual budgets. [http://www. and enforcement actions with respect to cartels.] John M. Connor and Gustav Helmers. activities. [The PICs spreadsheet.75MB and consisted of 3767 observations of 498 cartels and 4090 cartelists (companies and individual participants) with 810. M Connor.antitrustinstitute.