A cartel is a formal agreement among firms in an oligopolistic industry.
Cartel members may agree on such matters as prices, total industry output, market shares, allocation of customers, allocation of territories, bid-rigging, establishment of common sales agencies, and the division of profits or combination of these. Cartel in this broad sense is synonymous with “explicit” forms of collusion. Cartels are formed for the mutual benefit of member firms.
The theory of “cooperative” oligopoly provides the basis for analyzing the formation and the economic effects of cartels. Generally speaking, cartels or cartel behaviour attempts to emulate that of monopoly by restricting industry output, raising or fixing prices in order to earn higher profits.
Source: OECD
Shortly after revealing proposed amendments to the Competition and Consumer Protection Act (for details, please see my post from May 22), the Polish Competition Authority (the President of the Office for Protection of Competition and Consumers) published draft guidelines on commitment decisions (“Guidelines”). Since PCA nowadays uses commitment decisions increasingly often (125 such decisions were…
The leniency policy which was introduced in Hungary as early as 2003 to encourage “penitent” undertakings to confess, unfortunately failed to fulfil the high hopes of the legislator. One might wonder what could be the reason for the relatively low number of processed applications, which are not supported by exact statistical data (only informal data),…
Unannounced inspections of business premises in Austria rarely occurred in the past. However, the Austrian Federal Competition Agency has clearly changed this of late. Meanwhile, it has conducted several inspections (recently, supermarkets were the focus) and has adopted a harsh approach in the conduct of searches. Legal Background Upon request by the Federal Competition Agency,…
The government proposal of the new amendments to the Antitrust Act reflect practical concerns of the Czech Anitrust Office. The amendment has been passed in the first and second readings in the Lower House of the Czech Parliament in spring 2012. It may be expected to become law in the second half of this year…
On 12 June 2012, the Austrian council of ministers has adopted a proposal for an overhaul of the Austrian Cartel Act and of the Competition Act. If passed by parliament, which is likely, the amendment will become law on 1 October 2012. This post considers the proposed key changes. (Once the bill has been duly…
In March 2011, the U.K. Government Department for Business, Innovation and Skills (“BIS”) consulted on proposed reforms to the U.K. competition regime. The objectives were lofty (“improving the robustness of decisions,” “supporting the competition authorities in taking forward high impact cases,” and “improving speed and predictability for businesses”) and the proposals in part structural (most…
On January 18, 2012, the district court of Bonn ruled on the scope of access to file for third parties in a cartel case under German law. The court rejected the claim insofar as it concerned access to leniency applications. This is a landmark decision. The court upheld the FCO’s practice to refuse access to…
On 2 February 2012, the EU’s General Court issued two important judgments concerning the issue of whether joint venture parents can be held liable for the cartel behaviour of their 50-50 joint venture. In T-77/08 (Dow Chemical v Commission) and T-76/08 (El du Pont de Nemours and Others v Commission), the General Court held that…
On 14 February, the Court of Justice will deliver a ruling on a preliminary reference by a Czech Regional Court in Brno, which is likely to provide welcome guidance on the issue of parallel proceedings within the ECN and the principle of ne bis in idem. The case concerns the legality of the Czech NCA’s…
On October 25, 2011, the Federal Cartel Office (“FCO”) fined mills company VK Mühlen AG in the amount of € 23.8 million for price fixing and customer and market allocation with competitors regarding the sale of flour in Germany. In addition, the FCO found that the participants coordinated capacity reductions. This has been the FCO’s…
