Edited by John Duns, Arlen Duke and Brendan Sweeney
Chapter 4: Anti-competitive agreements: The meaning of ‘agreement’
In the classic cartel, supposed competitors meet in the proverbial smoke-filled hotel room and agree to fix prices at supra-competitive levels. Even though the ‘agreement’ is unlikely to be legally binding on the parties (i.e., the agreement could not be enforced against one of the cartelists that began to ‘cheat’ by offering lower prices), virtually all modern economies would treat such a cartel as unlawful under their national antitrust laws. For the United States, this negative attitude toward cartels is both long standing (dating virtually to the passage of the Sherman Act in 1890) and harsh, with the potential not only for very large fines (in 2012, the Department of Justice sought a fine of $1 billion against just one of several participants in the LCD cartel – AU Optronics – and the Court granted a fine of $500 million), but also for incarceration for key individual participants (the Department of Justice (DOJ) asked for 10-year prison sentences for two individual executives of AUO and the Court awarded three-year sentences). And, of course, there is the very real possibility of follow-on private actions seeking damages that are automatically trebled. A recent report indicated that the total of the settlements reached thus far on behalf of US consumers with members of the LCD cartel was $1.1 billion. Other jurisdictions have come more recently to treat cartels harshly, but prosecution of such cartels is now pursued vigorously on a global scale.
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