The Impact of Cartels on Developing Countries

1
The Impact of Cartels on Developing Countries

• Dr. Simon J. Evenett
• 9 December 2004
• WTO/INTAL workshop, Brasilia

2
Summary of presentation

• What can policymakers learn from recent empirical
  studies on the impact of international cartels
  on developing countries?
• Relevance for design and implementation of
  national competition law.
• Relevance for discussions of current and
  potential future international initiatives on
  hard core cartels.
• What this presentation is NOT about.

3
Cartels prosecuted in the 1990s

• Prevalence 39 cartels
• Diverse membership 31 economies (including 8
  developing economies).
• Duration 24 cartels lasted at least 4 years.
• Overcharges on imports are not just the only
  adverse effect on developing economies.
• Exports are reduced too.
• Technology transfer slowed down also.

4
(No Transcript)
5
The international vitamins cartel

• Worldwide cartel, 1989-1999
• US Federal authorities took action in 1999
• US fines exceeded 900 million EU fines of a
  similar magnitude
• What effects on Latin America?

6
Overcharges on vitamins imports by selected Latin
American economies,1990-1999
7
Deterring and prosecuting cartels Lessons from
the 1990s

• Cartels are conspiracies prosecution requires
  evidence of inter-firm agreements.
• Tough sanctions are important, and so are
  leniency or amnesty programmes.
• Cross-border knock-on effects from national
  cartel enforcement
• Cartel members meet and hide evidence abroad
  often in jurisdictions with no enforcement.
• Non-enforcement harms trading partners
• Enforcement actions against cartels reveals
  information that is of value to other trading
  partners.

8
Concluding remarks

• International cartels exist in many lines of
  business.
• In recent years international cartels have caused
  billions of dollars of harm to developing
  countries.
• More countries are developing regimes to deter
  and to prosecute national and international
  cartels.
• National enforcement is unlikely to be
  sufficient. Eventually more attention will have
  to be given to international means to attack this
  menace.