May 30, 2011
Ways to Break Cartels
“The one reason for competition and anti-cartel policies
is that cartels have one common factor: consumers end up having
to pay more for the goods and services that they purchase.”
This resonated with Dr. Peter Lee U when he attended the 15th
International Conference on Competition in Berlin, Germany.
The compelling statement was a reminder from the German Minister
of Economy, Hon. Rainer Bruderle, when he extolled competition
as the engine of innovation and expressed a desire for an international
anti-cartel body or even a world-wide office to police and push
for an international anti-cartel law or policy.
Peter Lee U, Dean of the School of Economics & Assistant
Professor at the University of Asia & the Pacific
Key international cartels such as the OPEC, gas (in Russia),
rail travel not being completely liberalized in Europe, unjustified
electricity prices and its deleterious effects on competitiveness
were discussed. Dr. U indicated thus, “I could only agree
with the call to fight unjustified electricity prices. Coming
from the Philippines, where business has complained about high
electricity prices for so long, it affirmed our country’s
policy prerogative to pursue power sector reforms and achieve
more competitive rates.”
Operational questions on whether prevention or repression would
be the best way to fight cartels were reviewed. Programs that
foster voluntary compliance with anti-cartel laws such as growth
of antitrust departments of German companies and employee trainings
on compliance by the BASF were cited. Leniency programs that allow
reduction of fines or even immunity under certain circumstances
for parties that assist in investigating and prosecuting were
also emphasized. Dr. U noted that this should be an important
lesson to keep in mind when Philippine anti-cartel laws and policies
of the Bundeskartellamt, Mr. Andreas Mundt, stated in
the opening address that cartels do not stop at borders.
Effective cartel prosecution is also an international
task. This year’s International Conference on
Competition would improve more cooperation among the
competition authorities in the arena."
Since it was noted that even large multinational firms were not
exempt from the temptation to cartelize, sanctions must also be
part of a two pronged approach to fighting cartels. Some lessons
and principles in sanctioning that could be useful include taking
into account cash flows of companies. European laws providing
for imposing sanctions equivalent to 10% of global turnover (presumably
the turnover resulting from cartelization activities) were also
In discussing the economic approach to requirements of proof
in court, Dr. Fred Jenny, Chairman of the OECD Competition Committee
mentioned that economics had an important role to play especially
in helping to measure the impacts of cartel behaviour. Dr. Wolfgang
Kirchhoff, a Judge at the German Federal Court of Justice, posed
a challenge to economics when he noted that German courts rarely
call on economics expertise though parties increasingly bring
economic evidence to court. It was hinted that the problem may
be that economists spoke in highly technical economic, mathematical
and statistical terms that made it difficult for judges to understand
their arguments. Economists apparently also have to help judges
acquire an appreciation of economics.
In conclusion, Dr. U noted that “Perhaps one could not
help but have a heightened consciousness of the need for such
a set of competition policy/anti-cartel laws and enforcement agency
equivalent to the Bundeskartellamt in the Philippines these days.
The conference certainly educated me on key features and structure
for a future viable competition policy and anti-cartel agency
in the country.” Dr. U attended the conference with the
support of the Friedrich Naumann Foundation for Liberty (FNF).
Held every other year and themed this year ‘A Spotlight
on Cartel Prosecution,’ the conference was hosted by the
BundesKartellamt last 14 – 15 April 2011.
Dr. Peter Lee U is also the Vice-President of the Philippine
Economic Society (PES). FNF Philippine Office partners with
the PES in providing a venue for open and free discussions of
economic policy issues and research findings through conferences,
symposia and publications.