Fighting Hard Core Cartels

The paper provides a comprehensive survey of the economics behind the fight against hard core cartels. Following an introductory section, Section 2 focuses on the characterisation and rationalisation of the term 'hard core cartel'. It is found that - given the various forms of agreements between competitors - such a delineation is anything but straightforward. Subsequently, Section 3 concentrates on an assessment of the welfare effects of conduct defined as hard core cartel. A particular focus there lies on the possibilities to stabilize hard core cartels and the implied question of how severe the negative welfare effects of hard core cartels can be expected to be. Based on the key finding that hard core cartels can cause significant and long-lasting harm to customers and consumers, Section 4 focuses on the complementary question of how a cartel ban should be enforced by a competition authority, affected private parties and the respective court system. With respect to public enforcement, a focal point of interest lies in the assessment of both ex ante tools to reduce the incentives to form cartels and ex post tools to detect and intervene against existing cartels. By contrast, the economic assessment of private enforcement concentrates on the identification and quantification of the damages caused by hard core cartels. Finally, as the long term success of competition policy actions against hard core cartels depends on a continuous improvement and fine-tuning of policy tools, Section 5 discusses options to evaluate the effectiveness of enforcement actions against hard core cartels. Although it is not the focus of the paper to provide a detailed comparison of the proposed cartel enforcement framework with the current enforcement approaches followed in the European Union and the United States, the analysis reveals that some instruments discussed in the framework are currently not implemented to an economically optimal degree.

Hüschelrath, Kai and Jürgen Weigand (2010), Fighting Hard Core Cartels, ZEW Discussion Paper No. 10-084, Mannheim, published in: The International Handbook of Competition - Second Edition.