Connor Global Price Fixing

2., updated and revidierte Auflage 2007
ISBN: 978-3-540-34222-9
Verlag: Springer Berlin Heidelberg
Format: PDF
Kopierschutz: 1 - PDF Watermark

E-Book, Englisch, Band 26, 510 Seiten

Reihe: Studies in Industrial Organization

This book describes and analyzes the formation, operation, and impacts of modern global cartels. It provides a broad picture of the economics, competition law and history of international price fixing. Intensive case studies of collusion in the markets for lysine, citric acid, and vitamins offer a deep, detailed understanding of the phenomenon. The author assesses whether antitrust enforcement by the European Union, the United States, and other countries can deter cartels.

Autoren/Hrsg.

Connor, John M.

Inhaltsverzeichnis

1;Preface;6
2;Acknowledgements;10
3;Contents;11
4;Chapter 1: Introduction;15
4.1;Purpose and Scope;15
4.2;Importance of the Cases;17
4.3;Sources;26
5;Chapter 2: The Economics of Price Fixing;30
5.1;Basic Concepts;30
5.2;Price Fixing Conduct Defined;37
5.3;Conditions Facilitating Collusion;45
5.4;Effects of Collusion;55
5.5;Cartel Histories;58
6;Chapter 3: Anticartel Laws and Enforcement;66
6.1;Market Power;66
6.2;Anti-cartel Laws;68
6.3;Prosecuting International Price Fixing;80
6.4;Cartel Sanctions;108
7;Chapter 4: The Citric Acid Industry;125
7.1;The Product;125
7.2;Technology and Early Development;125
7.3;Market Size and Growth;127
7.4;The Structure of Production;129
7.5;Members of the Cartel;135
7.6;International Trade Patterns;143
7.7;Costs of Production;145
7.8;Selling Practices;147
8;Chapter 5: The Citric Acid Conspiracy;149
8.1;Introduction;149
8.2;Triggering Events;150
8.3;Meeting and Methods;153
8.4;Citric Acid Price Movements;157
8.5;The Role of Cargill;159
8.6;The China Problem;161
8.7;The Cartel Is Unmasked;163
9;Chapter 6: Economic Impacts of the Citric Acid Cartel;166
9.1;Price Effects;167
9.2;Effects on Production;170
9.3;Effects on International Trade;172
9.4;The Customer Overcharge;174
9.5;Conclusions;176
10;Chapter 7: The World Lysine Industry1;178
10.1;The Product and Its Uses;178
10.2;Technology of Production;180
10.3;History of the Industry;181
10.4;Market Size and Growth;189
10.5;Structure of Supply in the 1990s;191
10.6;M embers of the Cartel;194
10.7;Selling Practices;198
11;Chapter 8: The Lysine Conspiracy;200
11.1;The Price War of 1991-1992;201
11.2;Meetings and Methods;204
11.3;The Cartel Is Unmasked;227
12;Chapter 9: Economic Effects of the Lysine Cartel;229
12.1;Price Effects;229
12.2;Production Effects;234
12.3;Effects on International Trade;235
12.4;Effects on Profits;239
12.5;The Customer Overcharge;241
12.6;Conclusions;245
13;Chapter 10: The Global Vitamins Industries;247
13.1;Introduction;247
13.2;Industry Origins5;249
13.3;Market Structure;261
13.4;Companies;272
13.5;Market Size and Growth;278
13.6;Trade and Location of Production;281
14;Chapter 11: The Vitamins Conspiracies;283
14.1;Collusion Begins;283
14.2;Cartel Organization and Methods;287
14.3;The Roche Cartels;290
14.4;Cartels without Roche;316
14.5;Meeting Challenges to Collusion;324
14.6;Endgame: The Conspiracies Unravel;327
15;Chapter 12: Effects of the Vitamins Cartels;333
15.1;Duration;333
15.2;Price Effects;334
15.3;Profits;345
15.4;Customer Overcharges;346
16;Chapter 13: U.S. Government Prosecutions;350
16.1;The Antitrust Division;350
16.2;The Biggest Mole Ever Seen;352
16.3;Enter the FBI;356
16.4;Grand Juries;358
16.5;The FBI Raids;359
16.6;Lysine Guilty Pleas;360
16.7;The Citric Acid Prosecutions;366
16.8;Prosecution of the Vitamins Cartels;369
16.9;Impact on Civil Cases;383
17;Chapter 14: Antitrust Prosecutions Outside the United States;386
17.1;Lysine;387
17.2;Citric Acid;391
17.3;Vitamins;392
17.4;Other Jurisdictions;398
18;Chapter 15: The Civil Suits;401
18.1;Introduction;401
18.2;The Federal Lysine Case2;402
18.3;The Federal Citric Acid Case;407
18.4;The Federal Corn Sweeteners Cases;410
18.5;The Vitamins Cases;412
18.6;Indirect Purchasers’ Cases;416
18.7;Effectiveness of Civil Penalties;418
19;Chapter 16: The Business of Fighting Cartels;422
19.1;A Boon for Law Firms;422
19.2;Can the Antitrust Agencies Cope?;426
19.3;Were the Fines High Enough?;431
19.4;Are New Laws Needed?;440
19.5;Conclusions;444
20;Chapter 17: Global Price Fixing: Summing Up;447
20.1;Market Structure Matters;447
20.2;Escalating Antitrust Sanctions and Deterrence;453
20.3;Assessing Antitrust Sanctions;457
20.4;Financial Impacts of Antitrust Sanctions;461
20.5;Corporate Governance Structures;465
20.6;The Fate of Individual Conspirators;470
20.7;The Social Costs of Global Cartels;472
20.8;Antitrust Prosecutors: Methods and Reputations;474
21;References;480
22;Index;498

Leseproben

Chapter 8: The Lysine Conspiracy (p. 189-190)

Two top executives of the giant U.S. agribusiness firm Archer Daniels Midland flew from the company’s headquarters in Decatur, Illinois to Tokyo, Japan in April 1992. Terrance Wilson, President of the sprawling corn-products division of ADM, disliked long flights because he reacted badly to the effects of jet lag, but he was epitome of the loyal manager, and this trip could make tens of millions of dollars for his company if everything went according to plan.

Along with Wilson was a brash new ADM vice president, Mark Whitacre, who headed up ADM’s new Bioproducts Division. Whitacre was a quickly rising star at ADM. With his Ph.D. in nutritional biochemistry from prestigious Cornell University, he was well equipped to handle the technical side of the high-tech bioproducts business. The product the two men were concerned about was lysine, an essential amino acid that speeds up the formation of lean meat on farm animals. After getting his Ph.D., Whitacre had worked for the German company Degussa that was the world’s biggest maker of amino acids, and it was there that Whitacre had discovered he had a flair for salesmanship. It was this rare combination of talents that prompted ADM to depart from company practice and hire him away from Degussa rather than promote from within.

Terry Wilson had come as a young man straight from the U.S. Marine Corps to work for ADM. He loved the company and its charismatic leader, Dwayne O. Andreas, who had several times demonstrated that he personally cared for Wilson and his handicapped son. Wilson applied his tough military ways to his jobs at ADM, so that he rose from near the bottom of the company’s organization to very near to its pinnacle in his 25 years with ADM. Although Wilson had never gone to college, he had a thing or two to teach his more polished underling who was twenty years his junior. It was not the sort of thing taught in business schools. Terry Wilson was going to teach Mark Whitacre how to fix the world price of lysine.

This was a way of doing business that Terry Wilson knew a lot about. Just a year before this trip to Tokyo, Wilson had taken a very similar mission to Europe with his younger colleague Barrie Cox. In a few months under Wilson’s tutelage Cox had turned into an accomplished price fixer of citric acid (see Chapter 5). Now was the time to repeat that highly profitable lesson for Whitacre’s Biotechnology Division. Like citric acid, lysine was a high-tech product made by fermentation of the corn sweetener dextrose. Like citric acid, ADM had just entered the industry in a big way but wasn’t yet the industry’s top dog – ADM’s ultimate objective in all its lines of business. Like citric acid, new entry into the industry had precipitated a fierce price war that turned the ink red in all the producer’s books.

Now the time was ripe to let ADM’s rivals know that it was ready to play ball, to call off their aggressive scramble for market share, and to stanch the outflow of profits precipitated by the bloody yearlong price war. Wilson and Whitacre were on a peace mission to Tokyo to meet their counterparts at Ajinomoto and Kyowa Hakko, the two oldest and still dominant makers of lysine in the world. When the Americans met the Ajinomoto executives for the first time, Wilson made several specific proposals: establishing a lysine trade association, audited sales reports for its members, and a 50% increase in price. The sincerity of ADM’s offer to cooperate rather than fight would take a while to sink in, but within a few months the managers of all three companies would be toasting their newly formed partnership in crime.

The lysine cartel held its first formal meeting in June 1992. The event that made the conspiracy possible was ADM’s decision in 1989 to build the world’s biggest lysine plant. Without the demonstrated power of ADM’s large production to disrupt the market and to discipline recalcitrant lysine producers, the cartel would never have formed in the first place. ADM used the carrot of profits for all, the stick of its unused capacity, and diplomacy of a high order to get the others to join and cooperate. For the Asian producers a lengthy price war made them pine for the old days when world pricing was simply a sellers’ management decision.