Price Fixing and Repeated Games-6

Price Fixing and Repeated Games-6 - Price-Fixing and...

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Price-Fixing and Repeated Games 1
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What is a cartel? attempt to enforce market discipline and reduce competition between a group of suppliers cartel members agree to coordinate their actions prices market shares exclusive territories prevent excessive competition between the cartel members 2 Collusion and cartels
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Cartels have always been with us; generally hidden 3 Collusion and cartels But some are explicit and difficult to prevent OPEC - oil De Beers – diamonds Shipping conferences - freight rates and passenger fares eg. Far East Freight Conference (“FEFC”) North Europe-Asia (15 carriers)
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Electrical conspiracy of the 1950s 30 electrical-equipment manufacturers not only fixed prices but also had to agree on how to allocate market shares and divide up the largest customers (steam turbine generators, demand and watt-hour meters, and power circuit breakers). As the result of successful prosecution under the Sherman Act 1-Sec, 1,2 – companied and individual officers received fines over $1 million and some executives were given jail sentences. 4 Collusion and cartels
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Garbage disposal in New York "Where you gonna go? Who you gonna get? No one's gonna service you!" yelled a Barretti Carting Corporation representative into the phone before slamming the receiver down. This was customer service in New York City under the notorious Mafia-led garbage cartel. Fussy patrons might suffer verbal abuse, or they might get a visit from their garbage collector, which wasn't always a pleasant experience. "Hey, why send a poodle when you can send a pit bull?" a Barretti enforcer explained. …If they wanted to run their collection trucks down NY City streets, they had to join the cartel . 5 Collusion and cartels
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Archer, Daniels, Midland (ADM) One of the largest price-fixing conspiracies seen in modern times. The overcharges imposed on U.S. buyers of lysine and citric acid during 1994-5 amounted to at least $250 million .” (Connor, 1998). Japanese companies Ajinomoto and Kyowa Hakko Kogyo, and Korean companies Sewon America Inc. and Cheil Jedang Ltd Mark Whitacre, FBI informant and whistleblower of the Lysine price-fixing conspiracy - legal trouble for embezzling money from ADM during his time as an informant for the FBI The Informant - book and movie adaptation. 6 Collusion and cartels
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7 Collusion and cartels
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The vitamin conspiracy “A Swiss pharmaceutical giant, F. Hoffmann-La Roche Ltd today agreed to plead guilty and pay a record $500 million criminal fine for leading a worldwide conspiracy to raise and fix prices and allocate market shares for certain vitamins sold in the United States and elsewhere, the Department of Justice announced”. A German firm, BASF also will plead guilty and pay a $225 million fine for its role in the same antitrust conspiracy , the Department said. (DOJ, 1999) The conspiracy lasted from Jan 1990 into Feb 1999 and affected the vitamins most commonly used as nutritional supplements or to enrich human food and animal feed -- vitamins A, B2, B5, C, E, and Beta Carotene.
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