Failure and Success
Chapter 1: Introduction
Cartels ‘undermine and destroy a fundamental economic and political philosophy of Western democracies, ie free market capitalism’; are ‘cancers on the open market economy’; they are ‘the supreme evil of antitrust, overcharging consumers many billions of dollars each year’, and ‘serve only to rob consumers’. Such condemnation invites strong action; cartelists face, if caught, extremely high fines in the European Union (although the argument is made that these fines are insufficiently high–see Chapter 2, below), and high fines and imprisonment in the United States. Citing the experience of the US as a positive one, the UK introduced the Cartel Offence in 2002. The argument made in this book is that the decision to do so has, at the time of writing, resulted only in failure. When work began on this book I was not certain that I would reach this conclusion, but I was certain that the implementation of the law by the Office of Fair Trading (‘OFT’) had gone disastrously wrong, as evidenced in the collapse of the first prosecution to be taken ‘independently’. Earlier convictions secured in the Marine Hose cartel were, as will be discussed later in this book, in effect coerced on the back of United States’ enforcement activity–in the language of industrial economics and competition policy, the OFT was a ‘free rider’. It is not possible to say whether the success in this case led to a sense of complacency that in part contributed to the collapse of the British Airways case, which is discussed very extensively in Chapter 4 below. As of 2012 the UK’s Cartel Offence has been the dog that did not bark.