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Cartels - Coggle Diagram
Cartels
aims:
maximizing personal interest
harming competition/consumers
price fixing
market sharing
bid-rigging
collusive tendering
output restrictions
competition authorities/gov
harsh attitude toward cartels
object restriction
do not entertain the effect
severe penalties
idea of deterrents very important
can be fines/imprisonment
exemption?
no
but maybe certain circumstances
ex. export cartel
cartel engaging in a foreign market, competition authority has no way to enfore
ex. temporary crisis (in case of natural disaster etc.)
how are they set up?
need to have necessary convergence of interests
competitors need to realize that they could benefit from collusion
difficult to establish a cartel
risk of cheating
parties agree to cartel but then do not follow through
ex. agree to price fix
but then operating in an area where competitors do not, gives a discount to customers contrary to the cartel agreement
ring leader
increases likelihood of successful establishment
the biggest competitior
in position to coerce and control the cartel
retaliatory mechanisms
prevents cheating
needs to be organized/enforced at multiple levels
national/directors/local/chairmen/sales managers
sometimes cartel organized at lower level (by individuals within a company) and CEOs have no idea
most significant issue competition law is directed at
primary target of competition authorities
disrupt the free market economy
powers to conduct investigations
dawn raids
search homes/offices
reliance on intelligence services
may suspect something is going on/have received a tip
brought on board to conduct surveillance purposes
ex. listen in on conversations etc.
attendance of cartel meetings/parent companies
when attending meeting companies have STRICT LIABILITY attached
liable automatically
ex. goes to a meeting and does not receive an agenda in advance
conversation happens to steer in direction of cartels/harming competition
= liable (has infringed)
only way to avoid liability:
make it very clear that you do not agree with sentiments
publicly distance yourself
parent companies
liable for wholly subsidiaries that participate in cartel
liability imputed to parent company, they have responsibility for subsidiary
deterrent effect
leniency program
creating sufficient incentives for cartel members themselves to come forward to comp authority
confess to cartel
help successfully prosecute cartel
creates a "race" to report
if not the first to go then risk another cartel member coming forward and leaving them behind
but there are still many cartels that do not come forward
full immunity given
BUT not to ring leader
can only get partial (reduction in fine)
horizontal agreements/cooperation between competitors
association of undertakings
Wouters
lawyers/accountants practicing together
international reach
increasingly globalized world
many international cartels
Art 101
European Commission settlement mechanism