Understanding Cartel Participation and Collusion in Multi-Product Firms
Explore the dynamics of cartel participation and collusion within multi-product firms. Delve into issues of explicit collusion, detection of frequent colluders, and cartel participation durations for major companies since 1955. Uncover the complexities and social welfare concerns associated with colluding across various products.
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Presentation Transcript
Serial Collusion by Multi Serial Collusion by Multi- -Product Product Firms Firms William E. Kovacic Robert C. Marshall Michael J. Meurer July 23, 2018
Explicit collusion review Explicit collusion review Central issue for a cartel is secret deviations Structures are put in place to mitigate cheating Pricing Allocation Enforcement Amnesty is thought to be a great enforcement tool Creates incentive for defection to avoid penalties 2
Some firms seem to be frequent colluders Some firms seem to be frequent colluders Large multi-product firms We only see detected collusion No good estimate of how much collusion is undetected Antitrust enforcers are focused on one cartel at a time Colluding firms frequently dismiss collusion as the conduct of rogue managers Are there advantages for a large multi-product firm in colluding across many products? Is there a substantial social welfare concern? 3
Cartel participation durations for Cartel participation durations for Akzo Akzo Nobel since 1955 Nobel since 1955 Cartel Participation Durations for Akzo Nobel Since 1955 Duration 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 19 18 27 11 Akzo Nobel 7 13 26 24 3 4
Hypothetical duration chart Hypothetical duration chart 5
Cartel participation durations for BASF since 1955 Cartel participation durations for BASF since 1955 Cartel Participation Durations for BASF Since 1955 Duration 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 22 20 21 BASF 23 25 30 7 6
Cartel participation durations for Bayer since 1955 Cartel participation durations for Bayer since 1955 Cartel Participation Durations for Bayer Since 1955 Duration 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 20 29 8 Bayer 6 24 2 32 7
Cartel participation durations for Solvay since 1955 Cartel participation durations for Solvay since 1955 Duration 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 12 22 21 Solvay 23 25 30 13 8
Cartel participation durations for Cartel participation durations for Arkema Arkema/ /Atofina Atofina since 1955 since 1955 Cartel Participation Durations for Arkema / Atofina Since 1955 Duration 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 19 18 Arkema/Atofina 11 13 26 15 9
Cartel participation durations for Degussa since 1955 Cartel participation durations for Degussa since 1955 Cartel Participation Durations for Degussa Since 1955 Duration 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 12 16 19 Degussa 13 15 3 10
Cartel participation durations for Hoechst since 1955 Cartel participation durations for Hoechst since 1955 Duration 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 20 21 28 Hoechst 23 29 18 11
Cartel participation durations for Rhone Poulenc Aventis since 1955 Cartel participation durations for Rhone Poulenc Aventis since 1955 Duration 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 21 29 Rhone Poulenc Aventis 16 30 17 12
Cartel participation durations for Shell since 1955 Cartel participation durations for Shell since 1955 Duration 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 20 21 23 Shell 4 1 2 13
Cartel participation durations for Fides/AC Cartel participation durations for Fides/AC Treuhand Treuhand since 1955 since 1955 Duration 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 31 21 20 9 Fides/AC Treuhand 23 18 5 11 19 14
Cartel participation durations for Hitachi since 1980 Cartel participation durations for Hitachi since 1980 Duration 1980 1985 1990 1995 2000 2005 2010 2015 7 15 1 8 Hitachi 6 4 5 9 15
Cartel participation durations for Samsung since 1980 Cartel participation durations for Samsung since 1980 Duration 1980 1985 1990 1995 2000 2005 2010 2015 3 1 12 Samsung 2 4 13 5 16
Cartel participation durations for Mitsubishi since 1980 Cartel participation durations for Mitsubishi since 1980 Duration 1980 1985 1990 1995 2000 2005 2010 2015 7 1 11 Mitsubishi 8 4 9 17
Cartel participation durations for Toshiba since 1980 Cartel participation durations for Toshiba since 1980 Duration 1980 1985 1990 1995 2000 2005 2010 2015 7 1 Toshiba 6 3 5 18
Cartel participation durations for ICI since 1955 Cartel participation durations for ICI since 1955 Duration 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 20 21 ICI 23 29 15 19
Cartel participation durations for Panasonic since 1980 Cartel participation durations for Panasonic since 1980 Duration 1980 1985 1990 1995 2000 2005 2010 2015 15 3 Panasonic 13 14 20
Cartel participation durations for Cartel participation durations for Atochem Atochem since 1955 since 1955 Cartel Participation Durations for Atochem Since 1955 Duration 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 12 20 Atochem 21 23 21
Cartel participation durations for auto part firms since 1955 Cartel participation durations for auto part firms since 1955 Auto part firms participating in three or more cartels 22
Cartel participation durations for financial firms since 2000 Cartel participation durations for financial firms since 2000 Firms participating in three or more cartels 23
Hypothetical table Hypothetical table 24
Cartel involvement for chemical firms Cartel involvement for chemical firms 25
Cartel involvement for electronics firms Cartel involvement for electronics firms 26
Cartel involvement for auto part firms Cartel involvement for auto part firms 27
Cartel involvement for financial firms Cartel involvement for financial firms 28
Rogue division managers? Seems unlikely Rogue division managers? Seems unlikely Repeated episodes of detected explicit collusion Different time periods Extended time periods Reliance on cartel facilitators Participation across a broad group of firms 29
Advantages of managing a portfolio of cartels Advantages of managing a portfolio of cartels Transfers across cartelized products Thiamine, beta carotene example Other potential examples in paper Communications across cartelized products Use of leniency to establish a reputation for being tough with cheaters Akzo, then Degussa, then Akzo Monitoring cartel compliance made easier Familiarity with cartel facilitators Fides/AC Treuhand Marine hoses, Yen interest rate derivatives Many other potential cartel facilitators 30
Suggested policy Suggested policy r reforms WRT serial eforms WRT serial c colluders olluders Detailed cartel reconstructions Indications of anti-competitive conduct trigger mandatory reporting of Communications and transactions with competitors Adjustments in the incentives of sales personnel Changes in capacity related to previously cartelized products Merger review mandatory coordinated effects investigation Small cartel firms that are first-time offenders get amnesty AND bounty as qui tam relators 31
