International cartel enforcement: Lessons from the 1990s

International cartels are a non-trivial impediment to the flow of goods and services across borders. Recent enforcement experience suggests that widespread cartelisation in some industries has affected many nations' markets. This might not be a concern if national anti-trust laws provided a sufficient deterrent to international cartels - however, both a priori reasoning and the fragmentary record of international cooperation in this area suggests that this is not the case. In particular, three aspects of cartel enforcement need reform. First, the probability of a cartel being punished is considerably reduced by the current patchwork of bilateral cooperation agreements on evidence collection and sharing with foreign jurisdictions. Second, penalties based on national assessments of the pecuniary gains to cartelisation are unlikely to deter cartels that operate in many countries' markets. Third, vigilance should not end with a cartels' punishment, as former price-fixers often try to effectively restore the status quo ante by merging or by taking other steps that lessen competitive pressures and raise prices. Unless a pro-efficiency approach drives all competition policy enforcement, the benefits created by keen international cartel enforcement will be eroded by lax enforcement in other areas.