chapter  7
30 Pages

Cartels: Deterrence, Leniency and Criminalisation

Introduction The cartel is generally recognised as the most serious violation of competition law. A classic cartel is an agreement between horizontally related producers of a particular product across an industry. By being members of the cartel the producers no longer compete against each other and, effectively, gain the power of a monopolist through agreement. They will normally exploit that market power by xing prices, reducing output, or sharing customers or markets. All of those activities will increase costs for customers, compared to the costs that would have been faced in a competitive market, and increase the pro t levels for the cartel members. One of the reasons that cartels are seen as being so damaging is that there is very little economic justi cation for their existence; they are always detrimental and offer little or no redeeming bene t.