Global Marketing Strategy by Bodo B. Schlegelmilch

Author:Bodo B. Schlegelmilch
Language: eng
Format: epub
Publisher: Springer International Publishing, Cham

6.6.3 Cartels

A cartel can be described as the co-operation of two or more companies in order to illegally fix or control the price for certain merchandise. Such price-fixing agreements can involve companies located in different countries or even different continents.78

Nearly every country in the world has introduced laws against price cartels. Anti-cartel legislation serves the purpose of ensuring customer welfare and supports smaller businesses and the dispersion of political and economic power. Convicted cartels have to face severe fines based on the sales generated by the cartelized product. Companies in the US are charged about 20 % of the sales realized during the conspiracy. In addition, various aggravating multipliers like the size of the company or the length of the conspiracy are taken into consideration. The European Union has a similar approach, charging 10 % of sales generated in the cartelized product line.79

Global cartels, especially when they are operating across continents, are usually more difficult to identify and convict, since they typically try to generate profits in countries with little legislation against cartels. For example, almost all Asian countries lack a substantial fining system. But as global cartels affect the welfare of a large number of customers, multilateral co-operation via, for example, the WTO is gaining in importance.80

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