International Competition Policy

International Competition Policy

Maintaining Open Markets in the Global Economy

Michael A. Utton

The book begins by setting out the principles of competition and trade policies, and then goes on to address the impact of market globalisation on what are usually thought of as traditional antitrust concerns. These include the analysis of the difficulties arising from collusion and other restrictive practices, government sponsored ‘voluntary co-operation’, vertical restrictions and market access, pricing strategies of dominant firms and international mergers, all illustrated with a number of prominent case studies. The author concludes with an illuminating discussion on the feasibility of international co-operation on competition policy, the faltering progress that has been made so far and the prospects for future advances.

Chapter 3: An International Perspective on Collusive Behaviour

Michael A. Utton

Subjects: economics and finance, competition policy, industrial economics, international economics

Extract

I INTRODUCTION In their classic study Stocking and Watkins (1946: 3) observed that in the USA the term cartel ‘now commonly refers to international marketing arrangements’. The international emphasis was a reflection of the widespread resort to cartelisation in the inter-war period, often to try to alleviate the effects of world recession. The definition they used throughout their study was broad enough to include formal arrangements administered by a complex bureaucracy but also ‘gentlemen’s agreements or informal undertakings among business rivals’. Largely because of the encouragement or tolerance of cartels, the inter-war period has often been regarded as the heyday of international cartels. Some estimates suggested that as much as 40–50 per cent of international trade was cartelised or influenced by cartels (Rahl, 1981: 244). Equally dramatic was the widespread view that by the 1960s international cartels were no longer important. One distinguished observer concluded in 1968 that global cartels have ‘passed into history’ (Vernon, quoted in Rahl, 1981: 246). The growth of world trade, the renewed vigour of antitrust enforcement, as well as the adoption of antitrust by more countries, were all thought to have contributed to this development. Subsequent events, however, have shown that this happy state of affairs was comparatively short-lived. In 1997 the WTO reported that ‘there are some indications that a growing proportion of cartel agreements are international in scope’ (WTO, 1997: 40). By drawing on the antitrust records of just the EU and the USA, Evenett et al. (2001) were able to compile...

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