1. “Major Trends in Global Enforcement of International Cartels”
Distinguished Lecture by Prof. John M. Connor Professor Emeritus, Purdue University & Senior Fellow, American Antitrust Institute
 New Delhi, March 1, 2017
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2. Cumulative Corporate Penalties, Regions or Jurisdictions, Semi-Decades
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3. Trend in Cumulative Penalties Projected to Reach $280 billion by 2022
Trend is quadratic polynomial. Exponential fits nearly as good, but rises much faster. Based on five data points from previous slide on cumulative semi-decade monetary sanctions
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4. Number of Antitrust Jurisdictions Prosecuting International Cartels Is Climbing
Number of Jurisdictions
Counts number of jurisdictions, not authorities using the first year a guilty international cartel was probed. (nations with multiple authorities count only the first prosecution). In 1990, only DOJ (Tobacco 1911 or Steel Pipes 1990), EC (Quinine and Dyestuffs 1969), and Canada (R. v. Container Materials Ltd. 1942) had prosecuted such cartels. Excludes alleged cartels that received no sanctions after their cases were concluded.
Year cartel was investigated
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5. J M CONNOR CUTS DELHI MAR 1 2017
Intl. Cartel Fines Imposed by NCAs (EU’s National Authorities) 1989-July 2016
$ billions
Counts decisions with fines by EU-27 National Competition Authorities (and 3 from EFTA) Aug.
Year of Decision
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6. Total Fines in ROW Exploding
Total $17.5 billion
$ billion
Year Cartel Penalized
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7. Total CARTEL AMNESTIES Rising and Spreading across Jurisdictions
Total of 167 amnesties (full leniency). Years in which amnesty granted are imprecise, and for undercounted.
Year First Participant Fined
Mar 5, 2016
J M Connor, Purdue U.

8. Average Size of Fines per Decision Rising in ROW
$ Million
Average Year Cartel Penalized
Mar 5, 2016
J M Connor, Purdue U.

9. Cumulative Fines in ROW Projected to Reach $34 Billion by 2020
Cubic poly fits data best. Second-degree poly predicts lower amount.
Average Year Cartel Penalized
Mar 5, 2016
J M Connor, Purdue U.

10. Most ROW FINES Originate in Asia
Mar 5, 2016
J M Connor, Purdue U.

11. Most ROW FINES Originate in a Few Jurisdictions, 1990-2014
Mar 5, 2016
J M Connor, Purdue U.

12. INTERNATIONAL CARTELS INVESTIGATED IN INDIA, by Discovery Year
INTERNATIONAL CARTEL NAME
SALES ($M)
FINE ($M)
Note
DISCOV- ERY
PENALTY YR.
Soda ash export cartel, ZA & IN
1500
0.997
So. Af.
1996
Cement, Jabalpur, India
442 NA
2001
2007
Medical supplies in India, World Bank
350
Banned
2006
Shipping conference within IN-PK-BD-Ceylon, IN ? 
consent
2008
Pyrethroid bid rigging in India, World Bank 33
Cement, nationwide, IN
19,890
984.14
2010
2012
Explosives manufacturing, IN
949
11.25
2011
Auto Parts, IN  ?
485.3
2014
Potash & potassium chloride exports, CA & RU
930
2013
Cable, railway signaling, IN 49
Construction equipment manufacturing, IN
56,000
Airlines, passenger, IN
47,000
dismiss
2015
Vaccine, meningitis, IN
9.9
Cement, Haryana State, India
30.14
2017
TOTAL
127,143
1,522
From Private International Cartels data set (Jan Edition)
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13. Corporate Penalties Are Mostly Imposed on EU & U.S. Companies
Fines and settlements Based on 5449 companies with positive penalties. Excludes 22,000 US banks in Visa and MasterCard cases and XXX companies with unknown amounts of sanctions.
Location of headquarters of company or its ultimate parent group.
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14. Corporate Headquarters of Known Penalized Firms
Based on 2354 named companies with known monetary sanctions Excludes 22,000 US banks in Visa and MasterCard cases and 4539 companies with unknown amounts of sanctions.
NB : European cartelists account for 64% of the total of 2354.
Mar 5, 2016
J M Connor, Purdue U.

15. J M CONNOR CUTS DELHI MAR 1 2017
Disposition of Executives Charged for International Price-Fixing in USA
Total 1269 persons, 1990 to July 2016, of which 44% have been sentenced. Fines include mandatory restitution. Some of the indicted and dismissed are whistleblowers, some awaiting dismissal or a small fine. Of the “undetermined,” five appear to be awaiting sentencing in late The 306 fugitives include many Asian citizens.
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16. Trend in U.S. Private Recoveries ($ Bil.)
The first two big settlements were NASDAQ Market Makers and Explosives in The 2005 peak was due to final payments to the opt-outs in 15 Vitamins cases and 6 others. Year 2003 includes a huge settlement of $9993 million in the first Bank Cards Fees (a/k/a Visa and MasterCard1) retailers’ case which some experts may not classify as criminal price fixing. And the 2008 amount includes a $6650 million settlement in Visa & MasterCard 2 (AMEX and Discovery exclusion case) final data, but later years will be revised upwards.
Year First Company Settles (Zero Years Omitted)
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17. J M CONNOR CUTS DELHI MAR 1 2017
Mean Severity Ratios of Penalties on International Cartels,
Penalties/Affected Sales (%)
This slide measures severity by dividing the dollar penalties (fines, mandatory restitution, and reported private monetary settlements) by the cartel’s affected sales in the jurisdiction. There are 1516 unique observations: 136 EC, 232 EU NCAs, 99 US, 53 Canadian, 169 “other “ nations, 168 Private rights of action (of which 154 are No. American), and 662 World observations using global sales for global cartels, jurisdictional sales for all others. Consent decrees, warnings, and the like are entered as zeros and therefore not averaged.
Private settlements in N. America are divided by combined US and Canadian affected sales; jurisdictions where no price fixing occurred (i.e., zero affected sales) are excluded; “world” penalties (fines and private settlements from all jurisdictions) are divided by total sales in all jurisdictions in which price fixing occurred. For many US and Canadian cartels, the fines and private settlements are additive.
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18. RECOVERY RATIOS: PENALTIES THAT DETER
The optimal penalty (P*) for preventing cartels from forming ex ante is:
P* = (Expected Monopoly Profits) / (Probability of Prosecution)
We assume that the cartelists are good predictors, thus:
P* = (Actual Damages) / (Probability of Prosecution)
(Damages should be adjusted for the time value of money, i.e., pre-judgment interest to compensate injured parties for delays in making awards)
J M Connor CCI Conference 2017

19. U.S. Damages, Penalties, and the Optimal Penalty: The Lysine Cartel
Damages are actual overcharges plus a generous 20% deadweight losses. Incarceration generously valued at $6 million per year. All values converted to 2010 dollars. Lysine is one of the better-deterred cartels in US!
Source: John M. Connor and Robert H. Lande. Cartels As Rational Business Strategy: Crime Pays. Cardozo Law Review Vol. 34 Issue 2 (December 2012):
Note: Optimal penalty assumes 30% detection, 80% conviction probability.
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20. Why Over-Deterrence is Rare
Attorney anecdotes do not give numbers
Serial collusion and recidivism is high.
Affected commerce is typically too low.
Prejudgment interest is rarely rewarded, which longevity, slow decisions exacerbate.
No compensation for dead-weight losses
Anecdotes are ex post: fail to consider low probabilities of detection and conviction
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21. GLOBAL CARTELS REQUIRE COORINATED, GLOBAL ENFORCEMENT
Joint multinational raids are necessary to avoid destruction of evidence, but are seldom
Sharing information across authorities helps.
Basing fines on jurisdictional affected commerce avoids double-jeopardy problem.
The Intl. Competition Network (ICN) creates personal ties among enforcers.
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22. SUPERCARTELS A GROWING PROBLEM
Vitamins the first? Now 70 Auto Parts and 11 Currency Exchanges cases ($25 bil. penalties):
Data from PIC Dec
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