Cartels and anti-competitive agreements

What's new

  • Forthcoming roundtable discussions

    Forthcoming roundtable topics include: Algorithms and Collusion, Multi-sided Markets, Innovation in the Electricity Sector, Market Studies and Aftermarkets.

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  • More OECD work on Competition

    Main areas of work include: Digital Economy and Innovation, Market Studies, International Co-operation, Evaluation of Competition Interventions, Fighting Bid Rigging in Public Procurement and Competition Assessment.

    Read more
  • Inventory of international co-operation MOUs

    This inventory covers over 140 co-operation MoUs between competition agencies where at least one of the signatories is a competition authority of an OECD Member, Associate or Participant to the OECD Competition Committee, or the European Union.

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What are cartels and how do they affect consumers?

Hard core cartels (when firms agree not to compete with one another) are the most serious violations of competition law.  They injure customers by raising prices and restricting supply, thus making goods and services completely unavailable to some purchasers and unnecessarily expensive for others. 

The categories of conduct most often defined as hard core cartels are:

  • price fixing
  • output restrictions
  • market allocation
  • bid rigging (the submission of collusive tenders)
Hard core cartel prosecution is a priority policy objective for the OECD. Increasingly, prohibition against hard core cartels is now considered to be an indispensable part of a domestic competition law.

Challenges in detecting hard core cartels

Cartels are very difficult to detect.  They can involve many firms in the industry and customers are rarely in a position to detect the existence of a cartel.  Antitrust enforcers should be helped in their ability to detect cartels by various means and instruments, the most effective being leniency programmes.  These programmes provide immunity or reduction in sanctions for cartel members that co-operate (or ‘whistleblow’) with competition enforcers.  Leniency programmes have been adopted by most OECD countries and have been instrumental in increasing the success rate of the detection of cartels.

The best outcomes are secured by deterring firms from forming cartels in the first place.  Strong sanctions are therefore a fundamental component of an effective antitrust enforcement policy against hard core cartels.  An important supplement to fines against organisations for cartel conduct is sanctions against individuals for their participation in the conspiracy. These sanctions can take the form of substantial administrative fines or, in some countries, the criminal sanction of imprisonment.  The prospect of incarceration can be a powerful deterrent for businesspeople considering entering into a cartel agreement.

But are all agreements among competitors harmful? 

Some horizontal agreements between companies can fall short of a hard core cartel, and in certain cases may have beneficial effects.  For example, agreements between competitors related to research & development, production and marketing can result in reduced costs for companies, or improved products, the benefits of which are passed on to consumers. The challenge for competition authorities is how to assess these agreements, balancing the pro-competitive effects against any anti-competitive effects which may distort the market.


For further information related to the OECD work on cartels and anti-competitive agreements, please contact us at DAFCOMPContact@oecd.org.

  

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List of all policy roundtables on cartels

 

Latest roundtables on cartels

Algorithms and collusion, 2017

Big data: Bringing competition policy to the digital era, 2016

Cartels involving intermediate goods, 2015

Competition and cross platform parity agreements, 2015

Oligopoly markets, 2015

Competition and the use of markers in leniency programmes, 2014

OECD inventory of international co-operation agreements on competition, 2014

Enhanced Enforcement Co-operation, 2014

Ex officio cartel investigation and the use of screens to detect cartels, 2013

Competition and Procurement: Key findings, 2011

 

See also

OECD Recommendation concerning Effective Action against Hard Core Cartels

Hard Core Cartels: Third Report on the Implementation of the 1998 Council Recommendation, 2005 (pdf)

Formal Exchange of Information between Competition Authorities in Hard Core Cartel Investigations, 2005 (pdf)

 

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Fighting Bid Rigging in Public Procurement  

Bid rigging involves groups of firms conspiring to raise prices or lower the quality of the goods or services offered in public tenders. Although illegal, this anti-competitive practice continues to cost governments and taxpayers billions of dollars every year across OECD countries.

The OECD Guidelines for Fighting Bid Rigging in Public Procurement were developed to help governments design the procurement process so as to reduce risks of bid rigging and to detect conspirancies during the process.

Countries like Mexico and Colombia have already partnered with the OECD to improve procurement practices and step up their fight against bid rigging. 

» Read more about the Mexico-OECD partnership and related reports.

» See the 2014 report on Fighting Bid Rigging in Public Procurement in Colombia.

 

More on the OECD project on fighting bid rigging can be found at  www.oecd.org/competition/bidrigging

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