What do we really know about export cartels and what is the appropriate solution?

Journal of Competition Law and Economics

Volumn 4, Issue 4, 2008, Pages 967-982

  Sokol, D Daniel ^a  

^a UNIVERSITY OF FLORIDA   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

EID: 57849108978     PISSN: 17446414     EISSN: 17446422     Source Type: Journal    
DOI: 10.1093/joclec/nhm037     Document Type: Article

References (80)

1. Florian Becker, The Case of Export Cartel Exemptions: Between Competition and Protectionism, 3 J. COMPETITION L. & ECON. 97, 100 (2007).
2. Id. at 98.
3. Barbara Spencer & James A. Brander, Strategic Trade Policy, in THE NEW PALGRAVE DICTIONARY of ECONOMICS (S.N. Durlauf & L. E. Blume eds, Palgrave MacMillion 2008) (forthcoming).
4. See generally DENNIS C. MUELLER, PUBLIC CHOICE III (Cambridge University Press, 3rd edn, 2003).
5. See, e.g., JAMES M. BUCHANAN & GORDON TULLOCK, THE CALCULUS OF CONSENT: LOGICAL FOUNDATIONS OF CONSTITUTIONAL DEMOCRACY (University of Michigan Press, 1962);
6. George J. Stigler, The Theory of Economic Regulation, 2 BELL J. ECON. & MGMT SCI. 3 (1971);
7. DENNIS C. MUELLER, PUBLIC CHOICE III (Cambridge University Press, 3rd edn, 2003) (reviewing recent literature in public choice theory).
8. Sam Peltzman, Toward a More General Theory of Regulation, 19 J.L. & ECON. 211, 213 (1976).
9. Margaret C. Levenstein & Valerie Y. Suslow, The Changing International Status of Export Cartels, 20 AM. U. INT'L L. REV. 785, 800 (2005).
10. Margaret C. Levenstein & Valerie Y. Suslow, The Economic Impact of the US. Export Trading Company Act, 74 ANTITRUST L.J. 343, 348 (2007).
11. Becker, supra note 1, at 105-106.
12. Aditya Bhattacharjea, A Response to John Magnus on Joint Export Trade 39 J. WORLD TRADE 185, 185 (2005).
13. Becker, supra note 1, at 116.
14. Becker, supra note 1, at 126.
15. NEIL K. KOMESAR, IMPERFECT ALTERNATIVES: CHOOSING INSTITUTIONS IN LAW, ECONOMICS, AND PUBLIC POLICY (University of Chicago Press, 1997).
16. Margaret C. Levenstein & Valerie Y. Suslow, The Changing International Status of Export Cartels, 20 AM. U. INT'L L. REV. 785, 793 (2005).
17. Margaret C. Levenstein & Valerie Y. Suslow, The Economic Impact of the US. Export Trading Company Act, 74 ANTITRUST L.J. 343, 373 (2007).
18. An export cartel may allow firms to better monitor potential defections. Andrew R. Dick, When Are Cartels Stable Contracts?, 39 J.L. & ECON. 241, 243 (1996).
19. ROBERT AXELROD, THE EVOLUTION of COOPERATION 5-6, 16 (Basic Books, 1984).
20. F. M. SCHERER & DAVID ROSS, INDUSTRIAL MARKET STRUCTURE and ECONOMIC PERFORMANCE 313-14 (Houghton Mifflin Co., 3rd edn, 1990).
21. Christian Schultz, Export Cartels and Domestic Markets, 2 J. INDUST'Y, Comp. & TRADE 223 (2002).
22. See, e.g., JOHN M. CONNOR, GLOBAL PRICE FIXING (Springer, 2nd edn, 2007);
23. John M. Connor & Robert H. Lande, The Size of Cartel Overcharges: Implications for US. and EU Fining Policies, 51 ANTITRUST BULL. 983 (2006);
24. John M. Connor & Luyila Bolotova, Cartel Overcharges: Survey and Meta-analysis, 24 INT'L J. INDUST. ORG. 1109 (2006).
25. Aditya Bhattacharjea, Export Cartels: A Developing Country Perspective, 38 J. WORLD TRADE 331 (2004).
26. On antitrust capacity constraints in the developing world, see Michael W. Nicholson, D. Daniel Sokol & Kyle W. Stiegert, Technical Assistance for Law & Economics: An Empirical Analysis in Antitrust/ Competition Policy (University of Wisconsin Legal Studies Research Paper No. 1025, 2006).
27. Becker, supra note 1, at 115.
28. For examples of ancillary restraint analysis, see Texaco Inc. v. Dagher, 547 U.S. 1, 6-7 (2006);
29. Nat'l Collegiate Athletic Assn v. Bd. of Regents, 468 U.S. 85, 98 (1984);
30. Broad. Music, Inc. v. Columbia Broad. Sys., Inc., 441 U.S. 1 (1979);
31. United States v. Adayston Pipe & Steel Co., 85 F. 271 (6th Cit. 1898).
32. Brendan Sweeney, Export Cartels: Is There a Need for Global Rules, 10 J. INT'L ECON. L. 1, 3 (2007);
33. Andrew R. Dick, The Competitive Consequences of Japan's Export Cartel Associations, 6 J. JAP. & INT'L ECON. 275 (1992).
34. Andrew R. Dick, If Cartels Were Legal, When Would Firms Fix Prices?, in HOW CARTELS ENDURE AND HOW THEY FAIL (Peter Z. Grossman, ed., Edward Elgar Publishing, 2004).
35. Brendan Sweeney, Export Cartels: Is There a Need for Global Rules, 10 J. INT'L ECON. L. 1, 3 (2007).
36. In discussing the United States experience, Becker incorrectly states that the United States was the first to have antitrust law provisions. Although this is true at the state level, at the country level Canada preceded the United States in its antitrust law by a year.
37. U.S.C. §61.
38. U.S.C. §4001.
39. Becker, supra note 1, at 101-105.
40. Andrew R. Dick, Are Export Cartels Efficiency-Enhancing or Monopoly-Promoting?: Evidence from the Webb-Pomerene Experience, 15 RES. L. & ECON. 89 (1992);
41. Andrew R. Dick, When Are Cartels Stable Contracts?, 39 J. LAW & ECON. 241 (1996);
42. Andrew R. Dick, If Cartels Were Legal, Webb- Would Firms Fix Prices, in HOW CARTELS ENDURE AND HOW THEY FAIL (Peter Z. Grossman ed., Edward Elgar Publishing 2004) (of the sample of 125 cartels analyzed, 66 percent controlled less than half of the total export sales of their respective industries).
43. F. M. SCHERER, COMPETITION POLICIES FOR AN INTEGRATED WORLD ECONOMY 45 (Brookings Institution Press, 1994).
44. Margaret C. Levenstein & Valerie Y. Suslow, The Economic Impact of the US. Export Trading Company Act, 74 ANTITRUST L.J. 343 (2007).
45. Output may remain constant for any number of factors, some of which are exogenous such as currency fluctuations.
46. ICN, Report of the Capacity Building Working Group (2004).
47. D. Daniel Sokol, Monopolists Without Borders: The Institutional Challenge of International Antitrust in a Global Gilded Age, 4 BERKELEY BUS. L.J. 37 (2007).
48. John J. Parisi, Enforcement Co-operation Among Antitrust Authorities 20 EURO. COMP. L. REV. 133 (1999).
49. Aditya Bhattacharjea, Export Cartels: A Developing Country Perspective, 38 J. WORLD TRADE 331 (2004).
50. Michael Wise, Review of Competition Lazo and Policy in Mexico, OECD J. COMP. L. & POL'Y, 1, 25 (1999).
51. Kenneth W. Abbott & Duncan Snidal, Hard and Soft Lazo in International Governance, 54 INT'L ORG. 421 (2000).
52. Witness the strong reaction by the Department of Commerce against any limitation to Webb-Pomerene in the Antitrust Modernization Commission hearings.
53. Spencer Weber Waller, The Failure of the Export Trading Company Program, 17 N.C. J. INT'L L. & COM. REG. 239 (1992);
54. Spencer Weber Waller, The Ambivalence of United States Antitrust Policy Towards Single Country Export Cartels, 10 NW. J. INT'L L. & BUS. 98 (1989).
55. F.M. SCHERER, COMPETITION POLICY, DOMESTIC and INTERNATIONAL 395-403 (Edward Elgar Publishing, 2000).
56. In assessing fines in the United States, the Department ofJustice generally relies on the presumptions in the Guidelines, so economic impact is difficult to determine even in cases of hard-core cartels.
57. Claus-Dieter Ehlermann and Lothar Ehring, WTO Dispute Settlement and Competition Law: Views from the Perspective of the Appellate Body's Experience, 26 FORDHAMINT'L L.J. 1505, 1529-30 (2003).
58. The first sentence of GATT Article III:4 reads, "The products of the territory of any contracting party imported into the territory of any other contracting party shall be accorded treatment no less favourable than that accorded to like products of national origin in respect of all laws, regulations and requirements affecting their internal sale, offering for sale, purchase, transportation, distribution or use.
59. Appellate Body Report, United States - Tax Treatment for 'Foreign Sales Corporations, ¶209-10, WT/DS108/AB/RW (January 14, 2002) (recourse to Article 21.5 of the DSU by the European Communities).
60. Panel Report, Japan Measures Affecting Consumer Photographic Film and Paper, WT/DS44/R (March 31, 1998) ¶10.376-7 (hereinafter "Film").
61. Peter Holmes, James Mathis, TCA Anant & Simon J. Evenett, The EU and India on Competition Policy at the WTO: Is There a Common Ground?, in BRIDGING THE DIFFERENCES: ANALYSES OF FIVE ISSUES OF THE WTO AGENDA (L. Alan Winters & Pradeep S. Mchta eds, Jaipur: CUTS Centre for International Trade, Economics & Environment 2003).
62. Appellate Body Report, European Communities Measures Affecting Asbestos and Asbestos-containing Products, ¶185, WT/DS135/AB/R (March 12, 2001)
63. (citing GATT Panel Report, European Economic Community - Payments and Subsidies Paid to Processors and Producers of Oilseeds and Related Animal-Feed Proteins, L/6627-37S/86 (December 14, 1989)) (hereinafter "Asbestos").
64. Film at ¶10.36.
65. Asbestos, supra note 51, at ¶186. This suggests that nonviolation complaints may not yield many cases.
66. Eleanor M. Fox, The WTOs First Antitrust Case - Mexican Telecom: A Sleeping Victory for Trade and Competition, 9 J. INT'L ECON. L. 271 (2006).
67. J. Gregory Sidak & Hal J. Singer, Uberregulation Without Economics: The World Trade Organization's Decision in the U.S.-Mexico Arbitration on Telecommunications Services, 57 FED. COMM. L.J. 1 (2004);
68. Petros C. Mavroidis & Damien Neven, El Mess in TELMEX: A Comment on Mexico Measures Affecting Telecommunications Services, 5 WORLD TRADE REV. 271 (2006).
69. But see Eleanor M. Fox, The WTO's First Antitrust Case-Mexican Telecom: A Sleeping Victory for Trade and Competition, 9 J. INT'L ECON. L. 271 (2006) (supporting the WTO decision).
70. Aditya Bhattacharjea, Export Cartels: A Developing Country Perspective, 38 J. WORLD TRADE 331, 355 (2004).
71. D. Daniel Sokol, Monopolists Without Borders: The Institutional Challenge of International Antitrust in a Global Gilded Age, 4 BERKELEY BUS. L.J. 37, 112-15 (2007).
72. Margaret C. Levenstein & Valerie Y. Suslow, The Changing International Status of Export Cartels, 20 AM. U. INT'L L. REV. 785, 815-16 (2005).
73. Becker, supra note 1, at 126.
74. OECD, "Hard Core Cartels" 28 (2000), available at http://www.oecd.org/dataoecd/39/63/2752129.pdf. The term "export cartel" is not even mentioned in the most recent documents of the ICN cartel working group.
75. Mere mention of a discussion of export cartels at the Antitrust Modernization Commission received such negative comments by industry groups that benefit from these practices that the Commission dropped export cartels from its agenda even though other difficult issues that did not affect specialized interest groups remained in the agenda.
76. Bernard Hockman & Kamal Saggi, Tariff Bindings and Bilateral Cooperation on Export Cartels, 83 J. DEV. ECON. 141 (2007) (creating a model for export cartel enforcement by exporting countries in return for market access by importing countries).
77. Colm Keena, Competition body investigates US group over possible cartel activity, Irish Times, March 19, 2005, at 16.
78. Alternatively, there may be some sort of tacit understanding that an agency in one country will not undertake enforcement against the export cartel of another country so long as there is reciprocity for the export cartels of the second country.
79. Prepared Testimony of John J. Sullivan before the Antitrust Modernization Commission, "Statutory Immunities and Exemptions" (December 1, 2005).
80. On shaming in the antitrust context see Maurice E. Stucke, Morality and Antitrust, 2006 COLUM. BUS. L. REV. 443 (2006).