CARTELS & ANTITRUSTPORTRAYED:

PRIVATE INTERNATIONAL CARTELS, 1990-2008

John M. Connor,Purdue University

jconnor@purdue.eduDecember 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 1990 d N b 2008 E h t l h d ti i tJanuary 1990 and November 2008. Each cartel had participants 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

• Part 1: Number, Size, and Industries• Part 2: Cartel Detection• Part 3: Internal Structures of Cartels• Part 4: Corporate fines and Settlements

SLIDES

4-1113-2324-3031-54• Part 4: Corporate fines and Settlements

• Part 5: Individual Sanctions• Part 6: Market Effects and Damages• Sources

55-6766-7980

PART 1

• Numbers and sizes of cartels and their participants.

• Industry characteristics

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%)• 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.

Numbers of Corporate Cartelists

• At least 5900 companies in total

• About 2900 ultimate parent companies known by name and location*

• Ab 3000 i i li d b• About 3000 more companies implicated, but are anonymous

• Almost 2400 have been fined*

* Some double counting of recidivists

Numbers of Cartel Executives Fined or Imprisoned

• At least 373 individual, named executives have been penalized

• Hundreds more were guilty but given immunityimmunity

• Thousands more were guilty but not prosecuted

Total Known Affected Sales by International Cartels Is $16.6 Trillion

5

6

7

8

0

1

2

3

4

EC EU NCAs US Other

$ Trillion Nominal

“EC” is cartels convicted by the Eur. Commission

Huge Increases in Known Affected Salesby International Cartels, 1990-2008

10

12

14

16

0

2

4

6

8

1990-94 1995-99 2000-04 2005-08

$ Trillion

Note: in $2008 dollars, sales are at least treble the nominal (current) dollars shown.

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

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

LEADING CARTEL INDUSTRIES

ConstructionTransport services

Cement, graphite, glassDistribution

Food & Tobacco Mfg.Organic Chemicals

No.

0 20 40 60 80 100 120

Paper & printingBanking & Insurance

Telecom servicesMetals

Inorganic ChemicalsRubber & plastic

MachineryInstruments & Misc.

Other services

Number of cartels 1990-2008

Part 2: DETECTION

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.

Rate of Discovery Are Eight Times Higher in 2005-08

30

40

5049.3

ed p

er y

ear

0

10

20

1990-94 1995-99 2000-04 2005-08

6.2

Year of Discovery of All International Cartels

Num

ber d

etec

te

Rates of Discovery of Global CartelsAre Rising Slowly

5

6

7

8

9

8.0

0

1

2

3

4

5

1990-94 1995-99 2000-04 2005-08

Number per year

1.6

“Global” cartels affected prices in two or more continents

Rates of Discovery by the European Commission Rise Steadily

4

5

6

1.82.4

3.6

5.5

0

1

2

3

1990-94 1995-99 2000-04 2005-08

cartels

Cartel Detections by the EU’s NCAs Surpass All Others since 2000

12

14

16

18

20

0

2

4

6

8

10

1990-94 1995-99 2000-04 2005-08

Detections

Cartel Detections by the US and Canada Are Stalled

3

3.5

4

4.5

5

0

0.5

1

1.5

2

2.5

1990-94 1995-99 2000-04 2005-08

Detections

Asian Anti-Cartel Enforcement (Especially Korea) Is Accelerating

5

6

7

8

9

0

1

2

3

4

5

1990-94 1995-99 2000-04 2005-08

Detections

Cartel Detections in Africa and Latin America Are Modest but Significant

4

5

6

7

0

1

2

3

4

1990-94 1995-99 2000-04 2005-08

Detections

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.

Number of Corporate Cartelists Is Rising

1500

2000

ate

part

icip

atio

ns

0

500

1000

1990-94 1995-99 2000-04 2005-08

Num

ber o

f cor

pora

Year cartel was detected

Part 3:Internal Structures of Cartels

Number of Companies per Cartel Steady

8

10

12

orpo

ratio

n/ca

rtel

0

2

4

6

1990-94 1995-99 2000-04 2005-08

Aver

age

Num

ber

of c

o

Number of Companies in Cartels, 1990-2008 Total

15

20

0

5

10

2 3 4 5 6 7 8 9 10

percent

Number of corporate participants

Duration of All International Cartels Falling

102

83

63

100

150

ave

rage

6357

0

50

1990-95 1996-99 2000-03 2004-07

Mon

ths

on

Duration of Global-Scope International Cartels

141

8072

84100

150

vera

ge

72

0

50

1990-95 1996-99 2000-03 2004-07

Mon

ths

on a

v

Note: Global cartels operated in multiple continents

Duration of Regional Cartels

72 7383

100

150

vera

ge

72 7359

0

50

1990-95 1996-99 2000-03 2004-07

Mon

ths

on a

v

Regional cartels operated in one jurisdiction

Duration of International Cartels in Asia

65

100

150

vera

ge

24

65

31

50

0

50

1990-95 1996-99 2000-03 2004-07

Mon

ths

on a

v

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 authoritiesbeen overtaken by other authorities.

• EC fines exceeded the DOJ’s after 1999.

• Over 4300 companies investigated

• Over 1500 companies penalized

• Over 370 executives fined or imprisoned

Penalties on International CartelsTotal $ 61.2 Billion (1990-2008)

20

25

30

35

0

5

10

15

20

Govt. Fines Private Settlements

USD

Penalties on International Cartels Are Surging

30

35

40

45

50

0

5

10

15

20

25

1990-94 1995-99 2000-04 2005-08

$ Billion

Government Fines Imposed on International Cartels Total $ 32.9 Billion

10

12

14

16

18

0

2

4

6

8

10

EC NCAs Other US Canada

$ Billion

Penalties Are Rising in All Jurisdictions

2005 0810

15

20

25

1990-94Billi

on

1990-941995-99

2000-042005-08

05 1995-99

2000-04

2005-08

$

Number of Corporations Fined, U.S. Dept. of Justice, 1990-2008

50

60

70

80

0

10

20

30

40

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Domestic

Intl

International Cartel Fines Collected, U.S. Dept. of Justice, 1990-2008

700800900

1000110012001300

Total $5.4 billion

n

0100200300400500600700

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

$ M

illio

n

International Cartel Fines/Total Collected, U.S. Dept. of Justice, 1990-2008

500

600

700

800

0

100

200

300

400

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

Perc

ent

International Cartel Fines/Total Collected, U.S. Dept. of Justice, 1990-2008

100

120

140

160

nt

0

20

40

60

80

1990-94 1995-99 2000-04 2005-08

Fiscal years (DOJ) and calendar years (Intl.) do not match: FIX?

Perc

en

Number of Cartel Decisions, European Commission, 1990-2008

8

10

12

14

16

Total 90

cisi

ons

0

2

4

6

8

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Year of Decision

Num

ber o

f Dec

Number of Companies in European Commission Decisions, 1990-2008

50

60

70

80Total 598 Firms

mpa

nies

0

10

20

30

40

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Year of Decision

Num

ber o

f Com

Number of Adverse Decisions about Intl. Cartels, EC and DOJ, 1990-2008

10

12

14

16

0

2

4

6

8

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]

Intl. Cartel Fines Collected, European Commission, 1990-2008

2000

2500

3000

3500

4000

Total $15.6 billion

0

500

1000

1500

2000

1990

1995

1996

1997

1998

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

$ Mil.

Year of Decision

International Cartel Fines Collected, EC and DOJ Compared, 1990-2008

2500

3000

3500

4000

0

500

1000

1500

2000

1990

1995

1996

1997

1998

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

EC

DOJ

Year First Member of Cartel Is Fined

Intl. Cartel Fines Collected by NCAs(EU’s National Authorities) 1990-2008

800

1000

1200

1400

Total $6.2 billion

0

200

400

600

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

$ Mil.

Year of Decision

Intl. Cartel Settlements in the US1990-2008

5000

6000

7000

8000

9000

10000

Total $26.4 billion

0

1000

2000

3000

4000

5000

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

$ Mil.

Year of Major Settlement

Total International Cartel Penalties, EU and U.S. Compared, 1990-2008

8000

10000

12000

US total $32 billionEU total $22 billion

0

2000

4000

6000

1990

1995

1996

1997

1998

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

all EU

all US

$ m

illio

n

Other Government Fines on International Cartels Exceed $5 Billion

2000

2500

3000

3500

4000

on

0

500

1000

1500

2000

US AGs Korea Africa Latin America

Other Asia Oceania

$ M

illio

Most Private Cartel Settlements Are with Direct Buyers in the US

20

25

30

n

0

5

10

15

US Direct US Indirect Canada Other

$ Bi

llion

Over 4300 Companies Investigated

1500

2000

2500

nes

0

500

1000

1990-94 1995-99 2000-04 2005-08

Num

ber o

f Fi

At Least 94 Amnesties for International Cartels Granted

43

37

mne

stie

s

9

2 2

US EU Canada EU States Asia

Num

ber o

f Am

Corporate Cartelists Are from 57 Nations

Lat America

E. Europe

Asia

W. Europe

0 3 6 9 12 15 18

US & Canada

Africa

Oceanea

Lat. AmericaNations

NUMBER OF NATIONS

Corporate Penalties Are Mostly Paid by W. European Companies

6.7

11.0

36.2

Asia

US & Canada

W. Europe

0.05

0.11

0.2

0.38

Australia

E. Europe

Lat. America

Africa

$ Billion

Note : Western European international cartelists account for 66.3% of the total.

Most Penalized Corporations Are Headquartered in Western Europe

BritishDutch

JapaneseItalian

FrenchGerman

US

0 50 100 150 200 250

SwedishHungarian

SpanishBelgian

SwissKoreanBritish

NB : Western European cartelists account for 61.8% of the total of 1511.

Corporate Headquarters of Non-European Penalized Firms

217

251

Asia

US & Canada

Number of Companies

16

18

50

44

Australia

Africa

Lat. America

E. Europe

NB : Non-Western European cartelists account for 38.2% of the total of 1511.

PART 5: Individual Sanctions

• DOJ prison sentences are more severe

• Fines on executives are insignificant

Number of Executives Penalized by Nationality, International Cartels

UKEgyptJapan

AustraliaGermany

US

0 20 40 60 80 100 120

France Canada

NetherlandsSo. Korea

IsraelUK

NB : Totals 374, including a few anonymous cartelists.

Number of Executives Charged and Penalized by the DOJ per Year

50

60

70

80

90

CHARGED

FINED

0

10

20

30

40

50

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008

PRISON

Poly. (CHARGED)

Poly. (FINED)

Poly. (PRISON)

Proportion of Charged PersonsFined or Imprisoned by DOJ

60

80

100

t % FINED

0

20

40

1990 1994 1998 2002 2006

Perc

ent

% PRISON

Poly. (% FINED)

Poly. (% PRISON)

Proportion Fined/Charged, Individual Price Fixers, US, 1990-2008

60

70

80

90

0

10

20

30

40

50

1990-94 1995-99 2000-04 2005-08

All Cartels

International

PERC

ENT

Proportion Imprisoned/Charged, Individual Price Fixers, US, 1990-2008

50

60

70

80

0

10

20

30

40

50

1990-94 1995-99 2000-04 2005-08

All Cartels

International

PERC

ENT

Mean US Prison Sentences for All Price Fixers, 1990-2008

20

25

30

35

ER P

ERSO

N

0

5

10

15

1990s Avg.

2000 2001 2002 2003 2004 2005 2006 2007 2008

(NB: 2008 Workforce Stats due out early 2009)

MO

NTH

PE

Mean Length, US Prison Sentences for All Price Fixers, 1990-2008

20

25

30

35

PER

PERS

ON

0

5

10

15

1990 1993 1996 1999 2002 2005 2008

MO

NTH

S P

Mean Length, US Prison Sentences for International Price Fixers, 1990-2008

25

30

35

40

45

PER

PERS

ON

0

5

10

15

20

1990 1993 1996 1999 2002 2005 2008

NB: The median of 104 international cases is 10 months (2008 has partial data)

MO

NTH

S P

Average US Fines/Person for Price Fixers, 1990-2008

1000

10000

PER

PERS

ON

1

10

100

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

All Cartels

International

LOG

of $

‘000

Mean US Fines/Person for Price Fixers, 1990-2008

500

600

700

800

900

ERSO

N

0

100

200

300

400

500

1990-94 1995-99 2000-04 2005-08

All Cartels

International

$ ‘0

00 P

ER P

E

Note: The median 1990-2008 international fine is $100,000

Mean US Prison Days/Person for Price Fixers, 1990-2008

400

500

600

700

RSO

N

0

100

200

300

400

1990-94 1995-99 2000-04 2005-08

All Cartels

International

DAY

S PE

R PE

R

Mean US Fines/Person for Price Fixers, 1990-2008

500

600

700

800

900

ERSO

N

0

100

200

300

400

500

1990-94 1995-99 2000-04 2005-08

All Cartels

International

$ ‘0

00 P

ER P

E

Note: The median 1990-2008 international fine is $100,000

Part 6Market Effects and Damages

• Data on price effects are incomplete

Mean Penalties on Global Cartels, Relative to Affected Sales, 1990-2008 (%)

20

25

30

35

Sale

s (%

)

0

5

10

15

20

EU US Canada Private World

Median

Mean

Pena

lties

/Aff

ecte

d S

Severity of EU and US Median Penalties, Non-Global Cartels (%)

12

14

16

18

20

Sale

s (%

)

0

2

4

6

8

10

1990-94 1995-99 2000-04 2005-08

EU

US DOJ

Private

Pena

lties

/Aff

ecte

d S

NB. Includes consent decrees, warnings, other zero dollar penalties

Severity of EU, US & CanadianMean Fines, Global Cartels

20

25

30

ed S

ales

(%)

EU

0

5

10

15

1990-94 1995-99 2000-04 2005-08

Fine

s /A

ffec

te EU

US

Canada

NB. Includes consent decrees, warnings, other zero dollar penalties

Severity of Median Private Settlements, Global Cartels

10

12

14

16

18

20

cted

Sal

es (%

)

0

2

4

6

8

10

1990-94 1995-99 2000-04 2005-08

Pena

ltie

s/A

ffec Private

Avg. US&EU

NB. Includes consent decrees, warnings, other zero dollar penalties

EU, US & Canada: Severity of Median Fines, Global Cartels

12

14

16

18

20

cted

Sal

es (%

)

EU

0

2

4

6

8

10

1990-94 1995-99 2000-04 2005-08

Pena

ltie

s/A

ffec

EU

US

Private US

NB. Excludes consent decrees, warnings, other zero dollar penalties

Severity of Mean Private Settlements, Global Cartels

25

30

35

40

45

fect

ed S

ales

(%)

P i t

0

5

10

15

20

1990-94 1995-99 2000-04 2005-08

Sett

lem

ents

/Aff Private

Avg. US+EU

NB. Includes consent decrees, warnings, other zero dollar penalties

EU, US & Canada: Severity of Mean Fines, Global Cartels

20

25

30

ed S

ales

(%)

EU

0

5

10

15

1990-94 1995-99 2000-04 2005-08

Fine

s /A

ffec

te EU

US

Canada

NB. Excludes all zero-dollar penalties

Severity of Median Private Settlements, Global Cartels

15

20

25

cted

Sal

es (%

)

0

5

10

1990-94 1995-99 2000-04 2005-08

Pena

ltie

s/A

ffec Private

Avg. US&EU

NB. Excludes all zero-dollar penalties

EU, US & Canada: Severity of Median Fines, Global Cartels

10

12

14

16

18

ed S

ales

(%)

EU

0

2

4

6

8

1990-94 1995-99 2000-04 2005-08

Fine

s/A

ffec

te

EU

US

Canada

NB. Excludes all zero-dollar penalties

Mean Private Settlement Intensities, Global Cartels (%)

25

30

35

40

45

Aff

ecte

d Sa

les

P i t

0

5

10

15

20

1990-94 1995-99 2000-04 2005-08

Sett

lem

ents

/A Private

Avg. US+EU

NB. Excludes all zero-dollar penalties

MEDIAN LAGS: From Investigation to First Sanction, All Cartels, 1990-2008

21.56

33.336.41

19.79

30

40

hs 21.5619.79

0

10

20

US DOJ Canada EC Other Govt.

Mon

t

Excludes secret investigations

MEDIAN LAGS: From Investigation to First Sanction, Global Cartels, 1990-2008

37.75

32.58

23.7625

30

35

40

hs

18.98

0

5

10

15

20

US DOJ Canada EC Other Govt.

Mon

t

Excludes secret investigations

MEDIAN INVESTIGATION LENGTH, US DOJ, 1990-2008

17.15

32.82

20.9820

25

30

35

hs

8.57

17.15

0

5

10

15

20

1990-94 1995-99 2000-04 2005-08

Mon

t

Year the first cartelist was fined

Transparency of International Cartel Investigations, 1990-2008

61%57%

73%68%

100%

now

n Be

fore

Dec

isio

ns

0%

50%

U.S. DOJ Canada EC Other EuropeShar

e of

Inve

stig

atio

ns K

n

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• John M. Connor. DOJ Cartel Enforcement 1990 2007. [A spreadsheet created 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]