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    Cartels Portrayed 1.6.09 - Presentation Transcript

    1. CARTELS & ANTITRUST PORTRAYED: PRIVATE INTERNATIONAL CARTELS, 1990-2008 John M. Connor, Purdue University jconnor@purdue.edu December 20, 2008
    2. 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 January 1990 and N J d November 2008 E h cartel h d participants b 2008. Each t l had 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.
    3. OUTLINE SLIDES 4-11 Part 1: Number, Size, and Industries • 13-23 Part 2: Cartel Detection • 24-30 Part 3: Internal Structures of Cartels • 31-54 Part 4: Corporate fines and Settlements • 55-67 Part 5: Individual Sanctions • 66-79 Part 6: Market Effects and Damages • 80 Sources •
    4. PART 1 • Numbers and sizes of cartels and their participants. • Industry characteristics
    5. Numbers of Cartels • Between Jan. 1990 and Nov. 2008, there were 495 formal investigations (raids, grand juries, class actions filed, et sim.) of suspected international cartels. • Incomplete information is available on 96 (19%) because no adverse government decisions and no private settlements were made public. • Cases against 31 (6%) cartels were closed without sanctions because of insufficient evidence of a violation; these presumptive “non-cartels” are omitted from most slides.
    6. Numbers of Corporate Cartelists • At least 5900 companies in total • About 2900 ultimate parent companies known by name and location* • Ab About 3000 more companies implicated, b i i li d but are anonymous • Almost 2400 have been fined* * Some double counting of recidivists
    7. 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
    8. Total Known Affected Sales by International Cartels Is $16.6 Trillion 8 7 6 5 4 $ Trillion Nominal 3 2 1 0 EC EU NCAs US Other “EC” is cartels convicted by the Eur. Commission
    9. Huge Increases in Known Affected Sales by International Cartels, 1990-2008 16 14 12 10 8 $ Trillion 6 4 2 0 1990-94 1995-99 2000-04 2005-08 Note: in $2008 dollars, sales are at least treble the nominal (current) dollars shown.
    10. Estimated Affected Sales of Some Recent (2005-08)International Cartels Cartel Name and Type Sales ($ billion) Airlines, passenger, fuel surcharge ,Global 1,164.0 Diamonds, rough gem quality, Global 303.2 Bank cards' fees, US 285.0 Airlines, cargo, fuel surcharge , Global 264.9 Insurance brokerage fees, US & UK 145.0 LCDs (Liquid Crystal Displays), TFP type, Global 131.0 Telecom, mobile services 2, Korea 96.0 Cleaning products, home and personal, EU 74.1 Tobacco products, UK 43.5
    11. 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 •
    12. LEADING CARTEL INDUSTRIES No. Organic Chemicals Food & Tobacco Mfg. Distribution Cement, graphite, glass Transport services Construction Other services Instruments & Misc. Machinery Rubber & plastic Inorganic Chemicals Metals Telecom services Banking & Insurance Paper & printing 0 20 40 60 80 100 120 Number of cartels 1990-2008
    13. Part 2: DETECTION
    14. 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). • The EC’s cases are rising, but without g, settlements the rise in numbers is small. • The EU’s National Competition Authorities (NCAs) are now the biggest prosecutors. • Asia (=Korea) is becoming a cartel tiger. • Of late, So. Africa and Brazil are active also.
    15. Rate of Discovery Are Eight Times Higher in 2005-08 50 49.3 40 Number detecte per year 30 ed 20 10 6.2 0 1990-94 1995-99 2000-04 2005-08 Year of Discovery of All International Cartels
    16. Rates of Discovery of Global Cartels Are Rising Slowly 9 8 8.0 7 6 5 4 3 Number per year 2 1 1.6 0 1990-94 1995-99 2000-04 2005-08 “Global” cartels affected prices in two or more continents
    17. Rates of Discovery by the European Commission Rise Steadily 6 5 4 3 5.5 cartels 2 3.6 2.4 1 1.8 0 1990-94 1995-99 2000-04 2005-08
    18. Cartel Detections by the EU’s NCAs Surpass All Others since 2000 20 18 16 14 12 10 Detections 8 6 4 2 0 1990-94 1995-99 2000-04 2005-08
    19. Cartel Detections by the US and Canada Are Stalled 5 4.5 4 3.5 3 2.5 Detections 2 1.5 1 0.5 0 1990-94 1995-99 2000-04 2005-08
    20. Asian Anti-Cartel Enforcement (Especially Korea) Is Accelerating 9 8 7 6 5 4 Detections 3 2 1 0 1990-94 1995-99 2000-04 2005-08
    21. Cartel Detections in Africa and Latin America Are Modest but Significant 7 6 5 4 Detections 3 2 1 0 1990-94 1995-99 2000-04 2005-08
    22. Despite Heavier International Cartel Penalties, 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.
    23. Number of Corporate Cartelists Is Rising 2000 Number of corpora participations 1500 ate 1000 500 0 1990-94 1995-99 2000-04 2005-08 Year cartel was detected
    24. Part 3: Internal Structures of Cartels
    25. Number of Companies per Cartel Steady 12 orporation/cartel 10 8 Average Number of co 6 4 2 0 1990-94 1995-99 2000-04 2005-08
    26. Number of Companies in Cartels, 1990-2008 Total 20 15 10 percent 5 0 2 3 4 5 6 7 8 9 10 Number of corporate participants
    27. Duration of All International Cartels Falling 150 102 Months on average 100 83 63 57 50 0 1990-95 1996-99 2000-03 2004-07
    28. Duration of Global-Scope International Cartels 141 150 100 verage 84 80 72 Months on av 50 0 1990-95 1996-99 2000-03 2004-07 Note: Global cartels operated in multiple continents
    29. Duration of Regional Cartels 150 100 verage 83 73 72 Months on av 59 50 0 1990-95 1996-99 2000-03 2004-07 Regional cartels operated in one jurisdiction
    30. Duration of International Cartels in Asia 150 100 verage 65 Months on av 50 50 31 24 0 1990-95 1996-99 2000-03 2004-07
    31. PART 4 • Cartel fines and private settlements are about equal and exceed $60 billion combined. • The undisputed leader in fines – the DOJ – has been overtaken by other authorities. authorities • EC fines exceeded the DOJ’s after 1999. • Over 4300 companies investigated • Over 1500 companies penalized • Over 370 executives fined or imprisoned
    32. Penalties on International Cartels Total $ 61.2 Billion (1990-2008) 35 30 25 20 USD 15 10 5 0 Govt. Fines Private Settlements
    33. Penalties on International Cartels Are Surging 50 45 40 35 30 25 $ Billion 20 15 10 5 0 1990-94 1995-99 2000-04 2005-08
    34. Government Fines Imposed on International Cartels Total $ 32.9 Billion 18 16 14 12 10 8 $ Billion 6 4 2 0 EC NCAs Other US Canada
    35. Penalties Are Rising in All Jurisdictions 25 20 $ Billion 15 10 1990-94 2005-08 2005 08 5 1995-99 2000-04 1995-99 0 2000-04 1990-94 2005-08
    36. Number of Corporations Fined, U.S. Dept. of Justice, 1990-2008 80 70 60 50 40 Domestic 30 Intl 20 10 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
    37. International Cartel Fines Collected, U.S. Dept. of Justice, 1990-2008 1300 1200 1100 Total $5.4 billion 1000 900 800 700 $ Million n 600 500 400 300 200 100 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Year First Member of Cartel Is Fined
    38. International Cartel Fines/Total Collected, U.S. Dept. of Justice, 1990-2008 800 700 600 500 400 Percent 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
    39. International Cartel Fines/Total Collected, U.S. Dept. of Justice, 1990-2008 160 140 120 100 nt Percen 80 60 40 20 0 1990-94 1995-99 2000-04 2005-08 Fiscal years (DOJ) and calendar years (Intl.) do not match: FIX?
    40. Number of Dec cisions 0 2 4 6 8 10 12 14 16 1990 1991 1992 1993 1994 Total 90 1995 1996 1997 Year of Decision 1998 1999 2000 2001 2002 2003 2004 Number of Cartel Decisions, 2005 European Commission, 1990-2008 2006 2007 2008
    41. Number of Companies in European Commission Decisions, 1990-2008 80 Total 598 Firms 70 60 mpanies 50 Number of Com 40 30 20 10 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Year of Decision
    42. Number of Adverse Decisions about Intl. Cartels, EC and DOJ, 1990-2008 16 14 12 10 8 EC 6 DOJ 4 2 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 [Add individual cases for US]
    43. Intl. Cartel Fines Collected, European Commission, 1990-2008 4000 3500 Total $15.6 billion 3000 2500 2000 $ Mil. 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
    44. International Cartel Fines Collected, EC and DOJ Compared, 1990-2008 4000 3500 3000 2500 2000 EC 1500 DOJ 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
    45. Intl. Cartel Fines Collected by NCAs (EU’s National Authorities) 1990-2008 1400 1200 Total $6.2 billion 1000 800 600 $ Mil. 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
    46. Intl. Cartel Settlements in the US 1990-2008 10000 9000 Total $26.4 billion 8000 7000 6000 5000 $ Mil. 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
    47. Total International Cartel Penalties, EU and U.S. Compared, 1990-2008 12000 US total $32 billion 10000 EU total $22 billion 8000 6000 $ million all EU all US 4000 2000 0 1990 1995 1996 1997 1998 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
    48. Other Government Fines on International Cartels Exceed $5 Billion 4000 3500 3000 2500 on 2000 $ Millio 1500 1000 500 0 US AGs Korea Africa Latin Other Asia Oceania America
    49. 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
    50. Over 4300 Companies Investigated 2500 2000 Number of Fines 1500 1000 500 0 1990-94 1995-99 2000-04 2005-08
    51. At Least 94 Amnesties for International Cartels Granted 43 37 mnesties Number of Am 9 2 2 US EU Canada EU States Asia
    52. Corporate Cartelists Are from 57 Nations W. Europe Asia E. Europe Lat. Lat America Nations Oceanea Africa US & Canada 0 3 6 9 12 15 18 NUMBER OF NATIONS
    53. Corporate Penalties Are Mostly Paid by W. European Companies W. Europe 36.2 US & Canada 11.0 Asia 6.7 Africa 0.38 Lat. America 0.2 $ Billion E. Europe 0.11 Australia 0.05 Note : Western European international cartelists account for 66.3% of the total.
    54. 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 61.8% of the total of 1511.
    55. Corporate Headquarters of Non-European Penalized Firms Number of Companies US & Canada 251 Asia 217 E. Europe 44 Lat. America 50 Africa 18 Australia 16 NB : Non-Western European cartelists account for 38.2% of the total of 1511.
    56. PART 5: Individual Sanctions • DOJ prison sentences are more severe • Fines on executives are insignificant
    57. Number of Executives Penalized by Nationality, International Cartels US Germany Australia Japan Egypt UK Israel So. Korea Netherlands Canada France 0 20 40 60 80 100 120 NB : Totals 374, including a few anonymous cartelists.
    58. Number of Executives Charged and Penalized by the DOJ per Year 90 80 70 CHARGED 60 FINED 50 PRISON 40 Poly. (CHARGED) 30 Poly. (FINED) 20 Poly. (PRISON) 10 0 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008
    59. Proportion of Charged Persons Fined or Imprisoned by DOJ 100 80 60 % FINED Percent t % PRISON 40 Poly. (% FINED) Poly. (% PRISON) 20 0 1990 1994 1998 2002 2006
    60. Proportion Fined/Charged, Individual Price Fixers, US, 1990-2008 90 80 70 60 50 PERCENT All Cartels 40 International 30 20 10 0 1990-94 1995-99 2000-04 2005-08
    61. Proportion Imprisoned/Charged, Individual Price Fixers, US, 1990-2008 80 70 60 50 PERCENT All Cartels 40 International 30 20 10 0 1990-94 1995-99 2000-04 2005-08
    62. Mean US Prison Sentences for All Price Fixers, 1990-2008 35 30 MONTH PE PERSON 25 20 ER 15 10 5 0 1990s 2000 2001 2002 2003 2004 2005 2006 2007 2008 Avg. (NB: 2008 Workforce Stats due out early 2009)
    63. Mean Length, US Prison Sentences for All Price Fixers, 1990-2008 35 30 MONTHS PER PERSON 25 20 P 15 10 5 0 1990 1993 1996 1999 2002 2005 2008
    64. Mean Length, US Prison Sentences for International Price Fixers, 1990-2008 45 40 MONTHS PER PERSON 35 30 25 P 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)
    65. LOG of $ ‘000 PER PERSON 1 10 100 1000 10000 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Price Fixers, 1990-2008 2006 2007 Average US Fines/Person for 2008 All Cartels International
    66. Mean US Fines/Person for Price Fixers, 1990-2008 900 800 700 ERSON 600 500 $ ‘000 PER PE All Cartels 400 International 300 200 100 0 1990-94 1995-99 2000-04 2005-08 Note: The median 1990-2008 international fine is $100,000
    67. Mean US Prison Days/Person for Price Fixers, 1990-2008 700 600 500 RSON 400 DAYS PER PER All Cartels 300 International 200 100 0 1990-94 1995-99 2000-04 2005-08
    68. Mean US Fines/Person for Price Fixers, 1990-2008 900 800 700 ERSON 600 500 $ ‘000 PER PE All Cartels 400 International 300 200 100 0 1990-94 1995-99 2000-04 2005-08 Note: The median 1990-2008 international fine is $100,000
    69. Part 6 Market Effects and Damages • Data on price effects are incomplete
    70. Mean Penalties on Global Cartels, Relative to Affected Sales, 1990-2008 (%) 35 30 Penalties/Affected Sales (%) 25 20 S Median 15 Mean 10 5 0 EU US Canada Private World
    71. Severity of EU and US Median Penalties, Non-Global Cartels (%) 20 18 16 Penalties/Affected Sales (%) 14 12 S EU 10 US DOJ 8 Private 6 4 2 0 1990-94 1995-99 2000-04 2005-08 NB. Includes consent decrees, warnings, other zero dollar penalties
    72. Severity of EU, US & Canadian Mean Fines, Global Cartels 30 25 Fines /Affecte Sales (%) 20 ed EU 15 US Canada 10 5 0 1990-94 1995-99 2000-04 2005-08 NB. Includes consent decrees, warnings, other zero dollar penalties
    73. Severity of Median Private Settlements, Global Cartels 20 18 cted Sales (%) 16 14 12 Penalties/Affec 10 Private 8 Avg. US&EU 6 4 2 0 1990-94 1995-99 2000-04 2005-08 NB. Includes consent decrees, warnings, other zero dollar penalties
    74. EU, US & Canada: Severity of Median Fines, Global Cartels 20 18 cted Sales (%) 16 14 12 EU Penalties/Affec 10 US 8 Private US 6 4 2 0 1990-94 1995-99 2000-04 2005-08 NB. Excludes consent decrees, warnings, other zero dollar penalties
    75. Severity of Mean Private Settlements, Global Cartels 45 fected Sales (%) 40 35 30 25 Private Pi t Settlements/Aff 20 Avg. US+EU 15 10 5 0 1990-94 1995-99 2000-04 2005-08 NB. Includes consent decrees, warnings, other zero dollar penalties
    76. EU, US & Canada: Severity of Mean Fines, Global Cartels 30 25 Fines /Affecte Sales (%) 20 ed EU 15 US Canada 10 5 0 1990-94 1995-99 2000-04 2005-08 NB. Excludes all zero-dollar penalties
    77. Severity of Median Private Settlements, Global Cartels 25 cted Sales (%) 20 15 Penalties/Affec Private 10 Avg. US&EU 5 0 1990-94 1995-99 2000-04 2005-08 NB. Excludes all zero-dollar penalties
    78. EU, US & Canada: Severity of Median Fines, Global Cartels 18 16 Fines/Affecte Sales (%) 14 12 10 ed EU 8 US Canada 6 4 2 0 1990-94 1995-99 2000-04 2005-08 NB. Excludes all zero-dollar penalties
    79. Mean Private Settlement Intensities, Global Cartels (%) 45 40 Affected Sales 35 30 25 Settlements/A Private Pi t 20 Avg. US+EU 15 10 5 0 1990-94 1995-99 2000-04 2005-08 NB. Excludes all zero-dollar penalties
    80. MEDIAN LAGS: From Investigation to First Sanction, All Cartels, 1990-2008 40 36.41 33.3 30 Months 21.56 19.79 20 10 0 US DOJ Canada EC Other Govt. Excludes secret investigations
    81. MEDIAN LAGS: From Investigation to First Sanction, Global Cartels, 1990-2008 40 37.75 35 32.58 30 23.76 Months 25 18.98 20 15 10 5 0 US DOJ Canada EC Other Govt. Excludes secret investigations
    82. MEDIAN INVESTIGATION LENGTH, US DOJ, 1990-2008 35 32.82 30 25 20.98 Months 20 17.15 15 8.57 10 5 0 1990-94 1995-99 2000-04 2005-08 Year the first cartelist was fined
    83. Transparency of International Cartel Investigations, 1990-2008 nown Before Decisions 100% 73% 68% 61% 57% Share of Investigations Kn 50% 0% U.S. DOJ Canada EC Other Europe
    84. Sources John M. Connor. Private International Cartels: Full Data. [The PICs • spreadsheet, first created about 1998, is continuously updated. As of November 2008, the combined (Full Data) spreadsheet was a file of 4.75MB and consisted of 3767 observations of 498 cartels and 4090 cartelists (companies and individual participants) with 810,000 cells of data. There are also 13 back-up spreadsheets.] John M. Connor. DOJ Cartel Enforcement 1990 2007. [A spreadsheet created M Connor 1990-2007 • late 2007 and completed in early 2008. Contains annual budgets, activities, and enforcement actions with respect to cartels.] John M. Connor and Gustav Helmers. Statistics on Modern Private • International Cartels: Working Paper 07-01. Washington, DC: American Antitrust Institute (January 2007). [http://www.antitrustinstitute.org/recent2/567.pdf] John M. Connor. Cartel Amnesties Granted: Worldwide Whistleblowers SSRN • Working Paper (October 2008). [at SSRN: http://ssrn.com/abstract=1285469]

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