AAI Working Paper No. 11-‐05
CARTELS PORTRAYED: DETECTION A 21-‐Year Perspec9ve, 1990 to 2010 Author: John M. Connor, Purdue University
[email protected]
Introduc7on • The following charts illustrate the global size and economic impacts of the modern interna9onal cartel movement and the enforcement responses of the world’s an9trust authori9es and na9onal courts. • The sample encompasses 640 private hard-‐core cartels that were subject to government or private legal ac9ons (i.e., formal inves9ga9ons, damages suits, fines, or consent decrees) between January 1990 and December 2010. Each cartel had par9cipants with headquarters in two or more na9ons. The sample is believed to be a reasonably complete list of all contemporary private interna/onal cartels discovered by jurisdic9ons with an ac9ve press or informa9ve an9trust-‐authority Web site. • All monetary data are expressed in nominal U.S. dollars using exchange rates during the cartel’s life or on the day a legal ac9on was announced. • A special effort is made to create charts that illustrate trends in cartel dimensions and an9trust decisions. 8/2/11
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DETECTION: Interna7onal Cartels Are Now Being Assaulted on All Fronts
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Narra9ve on Detec9on • Indictments in the US and Canada seem to have peaked during 1995-‐2007, but are rising elsewhere. • The EC’s cases are rising and account for 1/6 of the total in the past six years. However, the EU’s Na9onal Compe99on Authori9es (NCAs) are now the biggest prosecutors, accoun9ng for ½ of the total. • Asia (mostly Korea) is becoming a cartel 9ger. • Of late, So. Africa and Brazil are ac9ve also. • Although increased detec9on rates are probably due to more agencies and beeer policies, the total number of cartels (including hidden ones) could be rising or falling 8/2/11
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Annual Cartel Detec9ons by the US DOJ Peaked in 2005-‐07 12 10 8 6
Detec9ons
4 2 0 Before 1995 1995-‐99 8/2/11
2000-‐04
2005-‐07
J M Connor, Purdue U.
2008-‐10 5
Cartel Detec9ons per year by Canada Are Falling 5 4.5 4 3.5 3 2.5
Detec9ons
2 1.5 1 0.5 0 Before 1994 1995-‐99 8/2/11
2000-‐04
2005-‐07
J M Connor, Purdue U.
2008-‐10 6
Rates of Discovery of All Cartels Are Rising over Time Number detected per year
60 56.7
50
59.3
40 30 20 10
9.8
0 Before 1994
1995-‐99
2000-‐04
2005-‐07
2005-‐10
Year of Discovery of All Interna9onal Cartels 8/2/11
J M Connor, Purdue U.
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Rates of Discovery of Global Cartels Peaked in 2005-‐2007 10 9
10
8 7
7.6
6
Number/ year
5
5.6
4 3 2 1
4 2.3
0 1991-‐94
1995-‐99
2000-‐04
2005-‐07
2008-‐10
“Global” cartels affected prices in two or more con9nents 8/2/11
J M Connor, Purdue U.
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Rates of Discovery by the European Commission Are Rising 12 10
11 9.8
8
9
6
Inves9ga9ons
6.2 4 2 1.9 0 Before 1994 1995-‐99 8/2/11
2000-‐04
2005-‐07
J M Connor, Purdue U.
2008-‐10 9
Detec9on Rates by the EU’s NCAs Surpass All Others since 2000 30
27.3
25 20 15
Detec9ons
10 5 1.2 0 1990-‐94 8/2/11
1995-‐99
2000-‐04
2005-‐07
J M Connor, Purdue U.
2008-‐10 10
Asian An9-‐Cartel Enforcement (Especially Korea) Is Accelera9ng 12
10.3
10 8 6
Detec9ons per year
4 2 0 1990-‐94 8/2/11
1995-‐99
2000-‐04
2005-‐07
J M Connor, Purdue U.
2008-‐10 11
Cartel Detec9ons in Africa and La7n America Are Now Above US Levels 22 20 18 16 14 12 10 8 6 4 2 0
19.7
Detec9ons per year
1990-‐94 8/2/11
1995-‐99
2000-‐04
2005-‐07
J M Connor, Purdue U.
2008-‐10 12
Narra9ve on Inves9ga9ons • Most government cartel inves9ga9ons are kept secret in North America, but in ROW raids are usually announced well before decisions. • Private ac9ons are the most publicized. • Inves9ga9ons on average take 3 years in Europe and half that 9me elsewhere. • Global cartel probes take longer to resolve
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Share of Inves9ga9ons Known Before Decisions
Transparency of Interna9onal Cartel Inves9ga9ons, 1990-‐2010
100% 77%
50%
43%
77%
41%
0%
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U.S. DOJ
Canada
EC
Other Govts. 14
MEDIAN LENGTH of Inves9ga9ons of All Interna9onal Cartels, 1990-‐2010 40
36.74 31.85
30.16
Months
30
20
20.28
19.8
10
0 US DOJ
Canada
EC
EU NCAs
Other Govts.
Excludes secret inves9ga9ons 8/2/11
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MEDIAN LENGTH of All Inves9ga9ons of Global Cartels Is Rela9vely High 90 80
77.56
84
70
Months
60 48
50 40
30.66
30 20 10 0 1990-94
1995-99
2000-04
2005-10
Excludes secret inves9ga9ons 8/2/11
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TREND in LENGTH of Median Inves9ga9on, US DOJ, 1990-‐2010 30 25.15
25
22.8 19.39
Months
20 15 10 4.8
5 0 1990-94
1995-99
2000-04
2005-10
Understates length because termina9on is year the first cartelist was fined
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Despite Heavier Interna9onal Cartel Penal9es, More Companies Are Becoming Cartelists More than 7800 instances of corporate cartel par9cipa9on have been iden9fied. At least 2600 have been fined during 1990-‐2010.
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Number of Corporate Cartelists Detected Is Rising Number of corporate par9cipants
3000 2500 2000 1500 1000 500 0 1990-‐94
1995-‐99
2000-‐04
2005-‐10
Year cartel was detected 8/2/11
J M Connor, Purdue U.
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Sources • John M. Connor. Private Interna/onal Cartels: Full Data. [The PICs spreadsheet, first created about 1998, is con9nuously updated. As of March 2011, the full data file was 11MB and consisted of 640 observa9ons of suspected or convicted cartels and 8500 cartelists (companies and individual par9cipants) with 2.8 million cells of data. There are also 13 back-‐up spreadsheets.] • John M. Connor. DOJ Cartel Enforcement 1990-‐2010. [A spreadsheet created late 2007 that contains annual budgets, ac9vi9es, and criminal enforcement ac9ons of the U.S. DOJ with respect to hard-‐core cartels.] • John M. Connor and Gustav Helmers. Sta/s/cs on Modern Private Interna/onal Cartels: Working Paper 07-‐01. Washington, DC: American An9trust Ins9tute (January 2007). [hep://www.an9trus9ns9tute.org/ recent2/567.pdf] • John M. Connor. Cartel Amnes/es Granted: Worldwide Whistleblowers (October 2008, updated). [at SSRN: hep://ssrn.com/abstract=1285469] 8/2/11
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Notes
Slide 5: Counts all cartels indicted, sued, raided, or formally inves9gated by a grand jury, the DOJ, or sued by private plain9ffs. Year is the earliest of these events reported in the press. There are 126 cartels in this slide. Slide 6: Counts all cartels indicted, sued, raided, or formally inves9gated by the Compe99on Bureau or sued by private plain9ffs. Year is the earliest of these events reported in the press. There are 49 cartels in this slide. Slide 7: Counts all 645 cartels indicted, sued, raided, or formally inves9gated by a court, commission, or private plain9ff (excluding suspected but cleared cartels). Year is the earliest of these events reported in the press. There is no double coun9ng of cartel discoveries in this slide. Glass Containers is the first cartel, inves9gated in 1983 with a bench trial ending 1990. Slide 8: Counts all 117 global cartels indicted, sued, raided, or formally inves9gated by a court, commission, or private plain9ff. Excludes suspected but cleared cartels. Year is the first of these episodes reported in the press. Slide 9: Year is first public no9ce of a raid or other knowledge of an inves9ga9on by the Commission. Counts all 159 cartels formally inves9gated by the EC. Almost all involved mul9ple Member States of the EU; some were global cartels, and EC prosecu9ons may be double counted with those of other jurisdic9ons in other slides. Year is the earliest of these events reported in the press and ranges from 1984 to 2010. Rates for 2008-‐10 probably understated. Slide 10: NCAs are the 27 current members of the EU, no maeer when they joined, plus the countries (now 4) that are members of EFTA and included in enforcing EU compe99on law. Counts all cartels indicted, sued, raided, or formally inves9gated by a court, commission, or private plain9ff. Year is the earliest of these events reported in the press. There are 243 cartels that were inves9gated by the EU’s NCAs.
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Notes Cont.
Slide 11: Counts all 88 cartels indicted, sued, raided, or formally inves9gated by a court, commission, or private plain9ff in Asia. Excludes Australia and New Zealand, which have a paeern similar to Asia. Year is the earliest of these events reported in the press. Slide 12: Counts all 152 cartels indicted, sued, raided, or formally inves9gated by a court, commission, or private plain9ff in Africa, Asia, or Oceania. By far the main protagonists are South Africa (40), Korea (35), Japan (13), and Brazil (16). Year is the earliest of these events reported in the press. Slide 14: Percentage of cartel cases that resulted in fines and where the dates of the inves9ga9ons (“raids” or grand juries empanelled) are first reported in the English-‐language press or on an an9trust authority’s Web site less than one month before a decision is announced. The difference between 100% and the percentages shown above may be called secrecy or confiden9ality. Slide 15: A lag is the 9me between the 9me an inves9ga9on (raid, statement of objec9ons, issuance of subpoenas, private damages suit, or grand jury) is first made public and the 9me the first penalty is announced. There are 253 cartels (88 US, co Canada, 101 EC, 81 NCAs, 88 other) with one or more kinds of completed legal ac9ons for which the dates are known; the median “total lag” from the first date in any jurisdic9on to the last date in any jurisdic9on (including generally lengthy private li9ga9on) is 36 months. Secret inves9ga9ons are those where the decision to convict one or more cartel par9cipants was the first 9me any public informa9on became available about the existence of an inves9ga9on. Slide 16: A lag is the 9me between the 9me an inves9ga9on (raid, statement of objec9ons, issuance of subpoenas, private damages suit, or grand jury) is first made public and the 9me the first penalty is announced. There are a total of 69 global cartels in the sample. The median “total lag” (the earliest date in any jurisdic9on to the last date a decision is made) for the 69 is 53.7 months.
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Notes Cont.
Slide 17: A lag is the 9me between the 9me an inves9ga9on (raid, statement of objec9ons, issuance of subpoenas, private damages suit, or grand jury) is first made public and the 9me the first penalty is announced. There are a total of 88 cartel prosecu9ons in the sample. Slide 19: Total is about 7800 ul9mate parents or “companies,” which double counts unique companies that par9cipated in two cartels. Excludes alleged cartels that received no sanc9ons arer their cases were concluded.
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