Rick Dumas-Eymard, Gordon Schnell, Sep 27, 2011
Perhaps it can be traced back to 1879, when Eugen Richter, a member of the German Parliament, stood in the Reichstag and, borrowing from the vocabulary of war, denounced as a “cartel” an open and notorious arrangement among rail, truck, and locomotive producers to charge their domestic customers more than foreign ones. Or maybe it was the original Trust Buster, Teddy Roosevelt, who a decade or so later shined an early spotlight on those illicit combinations that gave original embodiment to the “if you can’t beat them, join them” mentality. However it began in earnest, when the gavel started to come down on this early cartel activity, it did little to make cartels go away. It merely sent them underground. It has been a game of detection ever since.
Here we are, more than a century later. The world is far smaller. Information and transparency much greater. International cooperation so much stronger. And global cartel enforcement uniformly more aggressive. But the questions remain: Are we really in a better place? Have we made any real strides in stemming the unremitting tide of cartel activity? The answers are far from clear.
We certainly have new and more sophisticated tools at our disposal to uncover these unlawful gatherings. And the world’s attention to stopping this enduring scourge would appear to be at an all-time high. Just look at the global scorecard of cartel enforcement successes updated and expanded on an almost weekly basis. It seems like virtually every country is getting into the fray, promising to do their part to root out competitive mischief from their shores.
Yet, cartels continue to thrive. We read about them all the time. And those are only the ones we know about. We can only wonder about the ones that escape our view. To be sure, there are many. One recent study pegs the cartel detection rate as low as 13 percent, meaning for every cartel we stop, there are roughly eight more (and likely many more than that) carrying on with impunity. Regardless of any progress we have made in detection, we clearly have a long way to go.
So is the much heralded, universally adopted, corporate leniency program really the best way to get us there? There is little question that these programs have had some success. For the past decade and more, numerous corporations around the world have lined up with their mea culpas to avail themselves of these regulatory absolutions. And the lines seem to be getting longer all the time. But do these programs go far enough, and are they worth the cost? Or are they more of an albatross, getting in our way, diverting us from other avenues that depend less on the complicity of the wrongdoers and more on the exertions of the victims or, better yet, those tasked with protecting us from this blight. Perhaps it is time to take a step back and reconsider where we are in cartel detection and reassess what has up until now been the unquestioned primacy of corporate leniency in the competition enforcement scheme.