Cartel vs DC

2007 maybe the good year for the all the supporter of free competition. Up till now (April 2007), the Directorate of Competition (DC) at EU already fined two major cartel :

1. Elevator and Escalator Industry for price fixing in the Netherlands, Luxemburg, Belgium and Germany.

The convicted firms are amongs the leading firms in the world : Kone, Schindler,ThyssenKrupp, Kone, Mitsubishi. The total fined collected from these convicted firms are the largest fined in EU history. These five firms owns aroung 76 % of the total sales in elevator and escalator worlwide

Based on the previous experience in the vitamin and lysine cartel, no wonder that these firm will be also investigated by the Anti Trust authority in other countries. Rumors said that there is a current on-going investigation in Hongkong also for this industry.

This is a long time investigation for european case. I think the DC already investigated this cartel for more than two years. Luckily there is a leniency program in the EU. As EU start the investigation on 2004-2005, one firms directly use the the Leniency Program.
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2. Brewery in Netherlands. The convicted firms are Heineken, Grolsch and Bavaria. Again the same story happens here. After seven years of investigation, there is another cartel member InBev who give more evidence on the existence of the cartel. InBev use the leniency program after he get caught of the same brewey cartel in belgium (belgium brewery cartel).


Just a couple of weeks ago, DC also annouced that they will start the investigation on the possibility of price fixing cartel in the industry that produced bathroom and toilet utilities. I am quite sure that within this years, there will be at least one firm that will report to the DC about this cartel and thus get the leniency.

So what can we learn from this??

1. There is a tendency that the the number of cartel exposed and convicted increases after the leniency program

2. The Leniency program is effective after the Antitrust Authority announce that there will be an investigation on the specific cartel (this sample also supported by the theoretical work by Motta 1999, 2003 on Leniency Program)

3. The announcement effect in fact not only happen in the monetary field. It also happen in the collusive behavior.

4. Full cartel is very rare. Most of the cartel is partial.


The moral of this story :
" Make The Law of Leniency Program in Indonesia"