Abstract
A cartel is an agreement or a collective action to restrain reciprocal business activities among plural independent entrepreneurs competing in the same level of a business industry to prevent competition thereby securing extra profit. In order to achieve international law on cartels, the international community needs to focus on hard core cartel (HHC) activities with several types of categories, narrower than the definition, because most countries agree with the necessity of regulating such narrowed cartels and because international agreements have been developed with such focuses. Cartels cause more harms than benefits in markets and societies either domestic or global, so there needs regulations on cartels. Meanwhile, interstate commodity cartels need to be exempted from such cartel regulation so that they may reduce extreme price fluctuations. The Intergovernmental producers association (IPA) needs to be under international commodity laws different from the law for typical private cartels. To utilize international support for cartel regulations, international cartel law should focus on private cartels with priority since there have been growing research studies on the cartels sufficient enough to reach a consensus among countries.
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Notes
- 1.
- 2.
Huh (2002), pp. 15–17.
- 3.
Refer to http://dictionary.law.com. Dictionary in the other academic areas includes the public cartel in the similar way to the Law Dictionary. The Britannica Encyclopedia also includes state-monopoly or inter-state cartel, e.g. OPEC . Encyclopaedia Britannica (2007), p. 908. With focus on the element of ‘agreement’, Friedman (2007), p. 89 explains that a cartel is a group of independent suppliers, which agree to restrict trade to their mutual benefit. On the other hand, Greenwald ed. (1994), pp. 136–138 states, with focus on ‘anti-competitive acts’ rather than the agreement, that a cartel is a group of producers who coordinate price and output decisions to increase combined and individual output. If all producers of a good combine, the cartel may seek to imitate the behavior of a monopoly supplier, however, commonly, a fringe of small producers will operate outside the cartel.
- 4.
Garner (2003), p. 86.
- 5.
Baker (2001), p. 710.
- 6.
Garner (2003), at 376.
- 7.
Arizona v. Maricopa County Medical Society, 457 U.S. 332, 356 (1982); Texaco Inc. v. Dagher, 547 U.S. 1, 3; 126 S.Ct. 1276, 1277 (2006). In the Maricopa case, the Court held that the Medical Society was a foundation which did not sell different products but fixed price for medical services, and that it is not analogous to partnership or joint venture. In the Texaco case, the Supreme Court held that it is not per se illegal under Sherman Act § 1 for lawful, economically integrated joint venture to set prices at which it sells its products.
- 8.
See Northern Pacific R. Co. v. United States, 356 U.S. 1, 5, 78 S.Ct. 514, 518, 2 L.Ed.2d 545 (1958).
- 9.
Law dictionary, available at http://dictionary.law.com. See Garner(2003) at 687. The Black’s Law Dictionary by Garner defines the syndicate as a group organized for a common purpose, especially an association formed to promote a common interest and carry out a particular business transaction. See also Friedman (2007), p. 655. It defines the syndicate similarly as a group of individuals or companies who have formed a joint venture to undertake a project that the individuals would be unable or unwilling to pursue alone.
- 10.
Huh (2002), at 21.
- 11.
U.S. v. Penn-Olin Chemical Co., 378 U.S. 158, 168; 84 S.Ct. 1710, 1715 (1964). The Penn-Olin Chemical Co. case applied Sec. 7 of the Clayton Act, a merger regulation, to the formation by two corporations of a joint venture for production of sodium chlorate and dissolved the joint venture which may substantially reduce competition in a market.
- 12.
The Supreme Court explained activities violating Sec. 1 under per se illegal rule as ‘agreement or practices which because of their pernicious effect on competition and lack of any redeeming virtue are conclusively presumed to be unreasonable and therefore illegal without elaborate inquiry as to the precise harm which they have caused or the business excuse for their use.’ 356 U.S. 1, 5, 78 S.Ct. 514, 518, 2 L.Ed.2d 545 (1958).
- 13.
Northwest Wholesale Stationers, Inc. v. Pacific Stationery & Printing Co, 472 U.S. 284, 296 (1985). The case applied rule of reason standard regarding a cooperative activity involving exclusion as a type of concerted refusal to deal.
- 14.
Sir Mond was the organizer of the Imperial Chemical Industries (ICI) which consolidated competitors in the UK. As the other testator, Sir Pole was the chairman of the Associated Electrical Industries (AEI), a British company which produced and sold light bulbs.
- 15.
United States v. National Lead Co. et al., 332 U.S. 319, 340; 67 S.Ct. 1634, 1644; 91 L.Ed. 2077, 2096 (1947). The case is as regards the market division agreement of major titanium product manufacturers in the world by providing licenses to each other. It cites Monograph No. 1, Subcommittee on War Mobilization of the Committee on Military Affairs, U.S. Senate, 78th Cong., 2d Sess., Part I, p.1. Quoted also in U.S. v. National Lead Co., 63 F.Supp. 513, 523, note 5.
- 16.
Refer to Chap. 1. III.2.
- 17.
The ICI had been involved in 800 competition-restraining agreements with Du Pont, its American rival company. The 800 agreements ended in 1948 before U.S. antitrust suit regarding its anti-competitiveness produced its result. ICI Plc—Company Profile, Information, Business Description, History, Background Information on Imperial Chemical Industries Plc, available at http://www.referenceforbusiness.com/history2/19/Imperial-Chemical-Industries-Plc.html (visited on 24 Feb. 2008). Meanwhile, the AEI had been a member of the Phoebus cartel consisting of seven competing light bulb companies. The cartel controlled the manufacture and sale of light bulbs for almost 20 years (in 1920s and 30s). It started to be weakened when a Swedish-Danish-Norwegian union of companies launched an independent manufacturing center and sold lamps at a much lower price than Phoebus in spite of economic and legal threats by Phoebus. Phoebus Cartel, available at http://en.wikipedia.org/wiki/Phoebus_cartel (visited on 24 Feb. 2008).
- 18.
U.S. v. Trenton Potteries Co. 273 U.S. 392, 47 S.Ct. 377, 71 L.Ed. 700 (1927); U.S. v. Socony-Vacuum Oil Co., 310 U.S. 150, 60 S.Ct. 811, 84 L.Ed. 1129 (1940); Chicago Professional Sports LP and WGN Continental Broadcasting Co. v. National Basketball Association, 961 F.2d 667, 674 (Ct of App. 7th Cir. 1992).
- 19.
Broadcast Music, Inc. et al. v. Columbia Broadcasting System, Inc. et al., 441 U.S. 10, 99 S.Ct. 1551 (1979).
- 20.
Fox et al. (2004), p. 78.
- 21.
OFT, What is cartel, http://www.oft.gov.uk/advice_and_resources/resource_base/cartels/what-cartel. Visited on 24 Feb. 2008.
- 22.
OFT, Cartels and the Competition Act 1998: a guide for purchasers, 3 (2005), at http://www.oft.gov.uk/shared_oft/business_leaflets/ca98_mini_guides/oft435.pdf, visited on the same day.
- 23.
Gesetz gegen Wettbewerbsbeschraenkungen [GWB][Act against Restricting Competition], at http://www.bundeskartellamt.de.
- 24.
Bundeskartellamt, A Report to ICN Anti-cartel Enforcement, at http://www.bundeskartellamt.de.
- 25.
Compare Sec. 2(1) of ARC to the article of the EU Treaty. Refer to Chap. 2. 4(1) in this book. Although it adopts the almost same language, Sec. 2(2) states that Art. 101 (3) of the Treaty is applicable.
- 26.
Sec. 3(1).
- 27.
Japan Fair Trade Commission (JFTC) (2002), p. 1.
- 28.
JFTC, What Practices are Subject to Control by the Antimonopoly Act? (Sec. 3-1, How Does this Apply to Cartels?), available from http://www2.jftc.go.jp/e-page/aboutjftc/role/q-3.htm.
- 29.
English version of Monopoly Regulation and Fair Trade Act (MRFTA) of KOREA is available at http://ftc.go.kr/eng/.
- 30.
European Commission, Glossary of Terms used in EU Competition Policy, 8 (Brussels 2002), available at http://europa.eu.int/comm/competition/publications/glossary_en.pdf.
- 31.
For in-detail statute languages, refer to 1998 Competition Act Sec. 2(2) in the UK., this Chap. II. 3.(2).
- 32.
Artiicle 101.
- 33.
Id.
- 34.
The Model Law is formally named as The Substantive Possible Elements for articles for a Competition Law.
- 35.
OECD, Recommendation of the Council Concerning Effective Action Against Hard Core Cartel, 921st Sess. C/M(98)7/PROV (Mar. 25, 1998). See Art. I Sec. A. para. 2. subsec. a.
- 36.
I. A. 2. b. of the Recommendation.
- 37.
WTO, Competition Policy: History, available at http://www.wto.org.
- 38.
Paragraph 25, WT/MIN(01)/DEC/1, available at http://www.wto.org.
- 39.
For background of establishing ICN, see Harry First (2003), pp. 33–38.
- 40.
ICN Working Group on Cartels, Defining Hard Core Cartel Conduct, Effective Institutions, and Effective Penalties, 11–12, at http://www.internationalcompetitionnetwork.org.
- 41.
See id. 10.
- 42.
See id., 9–10.
- 43.
Rodger and Macculloch (2000), at 172–173.
- 44.
While the Sec. 2 of the Sherman Act applies to (attempt) monopoly, Sec. 7 of the Clayton Act, along with merger guidelines and procedural rules applies to merger. The Supreme Court has distinguished a vertical restraint from a cartel. NYNEX Corp. v. Discon, Inc. 525 U.S. 128, 136 (1998); Business Electronics Corp. v. Sharp Electronic Corp. 485 U.S. 717, 730; 108 S.Ct. 1515, 1523 (1988).
- 45.
Consent decree of General Motors/Toyota joint venture case, 103 FTC 374 (1984), includes such orders refraining them from exchanging pivotal non-public information e.g. price, marketing plans.
- 46.
Section 7 confines the definition of a ‘person’ under the Sherman Act to corporations and associations existing under or authorized by the laws of the U.S. or any state or any foreign country. The same language of the provision is adopted by Sec. 1(a) of the Clayton Act. The state monopolies or inter-state associations can be exempted from the U.S. competition law.
- 47.
317 U.S. 341, 351 (1943). At the page of 351, it states that there is no suggestion of a purpose to restrain ‘state action’ in the Act's legislative history and that the sponsor of the Sherman Act declared that it prevented only business combinations.
- 48.
See Chap. II. Sec. II. para. (c). It stipulates that the Model Law does not apply to the sovereign acts of the state itself, or those of local governments, or to acts of enterprises or natural persons which are compelled or supervised by the State or by the local governments or branches of government acting within their delegated power. Chap. II, Sec. II. para. (c). See UNCTAD (2007), p. 3.
- 49.
The ICA is an international agreement that restrains competition in international trade of a product or raw material with both consuming and producing countries as members while the IPA is one with producing countries only. Refer to 2.4, A of Chap. 2.
- 50.
Association of states producing natural resources or setting technical standards will be discussed at 2.4 of Chap. 2.
- 51.
FTC v. Indiana Federation of Dentists, 476 U.S. 447, 458 (1986). Application of the per se illegal in boycott cases is confined to the case where firms with market power boycott suppliers or customers in order to discourage them from doing business with a competitor. Group boycott has been under per se illegal since the U.S. Supreme Court decision, Klor's, Inc. v. Broadway-Hale Stores, Inc. 359 U.S. 207, 79 S.Ct. 705 (1959).
- 52.
American Bar Association (ABA) Section of Antitrust Law (2004), p. 65.
- 53.
Non-price vertical restraints are rarely opposed by competition authorities . UNCTAD (2007), at 26.
- 54.
National Society of Profession Engineering (NSPE) v. U.S., 435 U.S. 679, 691 (1978).
- 55.
See National Macaroni Manufacturers Ass’n v. FTC, 345 F.2d 421 (7th Cir. 1965); Radiant Burners, Inc. v. Peoples Gas Light & Coke Co. 364 U.S. 656, 659–660 (1961).
- 56.
In the U.S., courts which had held the activities derived from standard-setting illegal under per se rule, have relaxed the strict approach. The Standards Development Organization Advancement Act of 2004, Pub.L.No. 108-237, confirmed the shift. ABA Sec. of Antitrust Law (2004), at 31–32 and 34–35.
- 57.
ABA (2004), at 73. However, so called blocking patents, in which one party could not practice under its patent without infringing the other party’s patents, or complementary patents, which cover different aspects of the same technology, are less likely to be anti-competitive.
- 58.
U.S. DOJ Antitrust Division, Business Review Letter as to DVD Standards (10 June 1999).
- 59.
The legitimate interests are proper functioning of the organizations and overall efficiency in related markets. See Northwest Wholesale Stationers, Inc. v. Pacific Stationary & Printing Co., 472 U.S. 284, 296 (1985). The decision of a buying cooperative to expel a member would be under the rule of reason unless the cooperative has market power or exclusive access to an element essential to competition. On the other hand, in Pretz v. Holstein Friesian Ass’n of America, 698 F. Supp 1531, 1539 (Kan 1988), the court declined to apply the per se rule to the decision of a cattle registry association to exclude a member even when the association had very substantial market power and membership in the association was essential to effective competition.
- 60.
Nikki Talt, Kroes warns on open technology standards, FT, at 2 (11 June 2008). She made the statement at an OpenForum Europe seminar in Brussels.
- 61.
ABA (2004), at 44–46, and 47–79. In evaluating the selection and enforcement of standards, courts consider whether the standard creates or enhance the exercise of market power by the SSO or its members and whether the standard has an anticompetitive purpose or effect. The composition of a SSO may be an evidence of the anti-competitive motive. In addition, the non-discriminatory and consistent application of the standards may be another evidence of it. Some types of distortion of the standard-setting process show the anti-competitive effect or purpose.
- 62.
As to the concerted refusal to deal or boycott issue, refer to Broadcast Music, Inc. v. Columbia Broadcasting System, Inc. 441 U.S. at 20; 99 S.Ct. at 1562 and Northwest Whole Sale Stationeries, v. PSP Co., 105 S. Ct. at 2620. The Supreme Court acknowledges the necessity of careful defining of per se illegal group boycott, by quoting Sullivan, Law of Antitrust, 229–230 (1977), “there is more confusion about the scope and operation of the per se rule against group boycotts than in reference to any other aspect of the per se doctrine.”
- 63.
See http://en.wikipedia.org/wiki/Cartel (visited on 27th Feb 2008).
- 64.
Refer to Chap. 1. IV. and Chap. 2. IV for IPAs and ICAs.
- 65.
Fox et al. (2004).
- 66.
Bower and Rhenman (1985).
- 67.
Appalachian Coals Inc. v. United States, 288 U.S. 344 (1933).
- 68.
Eatwell et al. (1998), at 373. The National Industrial Recovery Act permitted industries to formulate ‘codes of fair competition’, which was ruled unconstitutional by the Supreme Court in 1935. However, the U.S. continued to maintain cartels in coal mining, oil production, interstate transportation, and agriculture.
- 69.
Bower and Rhenman (1985).
- 70.
Korea’s Fair Trade Commission (KFTC) has authority to approve collective behaviors of entrepreneurs when (1) it is clearly expected that demand for a product or a service would continue to decrease and supply would far exceed demand for substantial period, (2) price of the product or service is below average cost for substantial period, (3) substantial number of companies in the industry face possibility of discontinuing their business due to depression, and (4) rationalization of the company can not be a method of overcoming (1) through (3) situation. Huh (2002), 290.
- 71.
Model Law, Art. 3, paragraph 2.
- 72.
Baumol (2001), at 729–731.
- 73.
Id. at 732.
- 74.
Bower and Rhenman (1985), 126.
- 75.
Rodger and Macculloch, at 195.
- 76.
KFTC approves the cartel when (1) the R&D is necessary for increasing industrial competition power and the effect of the R&D on the market is significant, (2) investment for the R&D cost too much to be provided by one company, (3) the cartel is necessary for distributing risk of uncertain result of the R&D, and (4) the effect of R&D outweighs that of restraining competition. Sec. 24-3 of presidential decree of MRFTA.
- 77.
UNCTAD (2007), at 32–33.
- 78.
Bower and Rhenman (1985).
- 79.
Goldfarb et. ux. v. Virginia State Bar et al. 423 U.S. 886, 96 S.Ct. 162 (1975). The Supreme Court held, minimum-fee schedule for lawyers published by the Fairfax County Bar Association and enforced by Virginia State Bar is price-fixing and per se illegal under Sec. 1 of the Sherman Act.
- 80.
National Society of Professional Engineers v. U.S., 435 U.S. 679 (1978). The Supreme Court granted certiorari for the district court to decide the factual basis of justification and affirmed the trial courts’ decision that the ethical rules of the Society violated Sec. 1 of the SA which prohibited members’ competitive bidding before an engineer was selected for a specific project by a prospective client.
- 81.
Arizona v. Maricopa County Medical Society, 457 U.S. 332 (1982). The Court held, the maximum fee schedule is per se illegal price-fixing because (1) strict application of rule of reason standard cost significant money, (2) judges do not have much expertise understanding in the industry and its market structure, (3) a decision of a specific case with different background gives almost no certainty or standard for legitimacy of customs. Per se rule saves courts from the dilemma, and the Court has endured nullity of some customs that would prove to be reasonable if total review is to be done so as to secure procedural economy and conviction of the industry.
- 82.
FTC v. Superior Court Trial Lawyers Association, 493 U.S. 411 (1990). The Court held, the boycott for raising fee for trial lawyers’ representing criminal defendants in Washington D.C. was also price-fixing cartel and illegal per se.
- 83.
California Dental Association v. FTC, 526 U.S. 756 (1999). The Court held, the association’s ban on professional advertising about price and quality requires looking into the circumstances, details and logic of a restraint rather than a quick look analysis for rule of reason.
- 84.
Schedule 4 exempts designated professional rules. Rodger and Macculloch (2000), at 192–193.
- 85.
See Schedule 2 of the 1998 Act. Refer to id. at 193.
- 86.
The ICoO membership consists of 45 coffee importing countries as well as 32 exporting ones. Under the strict meaning, a cartel is arrangement among producers. The ICoO is not the cartel under the definition. However, it functions to restrain excessive competition in global coffee market and to maintain stable production and price of coffee through allocating market. Refer to ICoO, Rules on Statistics Indicator Price, at 13, Annex I, EB3776/01 Rev.1 (2001), available at http://dev.ico.org/documents/eb3776r1e.pdf (last visited on 23 Oct. 2007).
- 87.
McFadden (1986), pp. 815–817. The predecessor of ITA was the Int’ Tin Committee which had functioned as a producers’ cartel with its membership limited to producers from ‘20s to 40s. The ITA is an outgrowth of the Int’ Tin Study Group of 1948–1956, which produced a draft of tin agreement for ITA including consumer states as well as producers in the era of postwar cooperation.
- 88.
LeClair (2000), pp. 59–61 and Table 3.2. Price variation during ICA functioning period (1976–1986) was from 0.161 to 0.198 while it during non-functioning period (1989–1996) increased up to 0.303. See McFadden (1986), at 819. From the initial Int’ Tin Control Scheme in 1931 until the 1985 collapse, the ITA confined price fluctuations to a much narrower range than those in unregulated periods.
- 89.
Chapter I. Art.1 (2) of International Coffee Agreement 2001, available at http://dev.ico.org/documents/agreeme.pdf (last visited on 23 Oct. 2007).
- 90.
In the nitrogen cartel agreement of 1930, high cost enterprises were actually given larger relative quotas than low cost enterprises. Edwards (1976), p. 40.
- 91.
OECD (2002), p. 6.
- 92.
Edwards (1976), p. 41. It illustrates aluminium manufacturers’ cartel involving the Aluminium Corporation of America [Alcoa]. The cartel caused damage to efficiency in the market by price-increase and output reduction.
- 93.
Stockings and Watkins (1948), 116–122, 124–125 and 130.
- 94.
Id. at 129–134. LeClair (2000), 14–15 and 67–71. OPEC ’s share in the world oil market continued to decline from 55.4 % in 1973 to 28.5 % in 1985. The average price per barrel dropped to US$ 14.23 in 1986.
- 95.
Stocking and Watkins (1948), 138–141.
- 96.
Mcfadden (1986), 823–824.
- 97.
Id. at 136. Edwards (1976), 40.
- 98.
- 99.
Stocking and Watkins (1948), 104–106.
- 100.
Id. at 216–240.
- 101.
Id. at 108.
- 102.
McFadden (1986), 825 and 830.
- 103.
- 104.
Consumers’ damage (CD) is used for persuading consumers and policy makers to implement strict policy against cartels, to redress to consumers and to measure appropriate sanctions. OECD (2002), 6.
- 105.
Id.
- 106.
OECD, Policy Brief: Hard Core Cartel—Harm and Effective Sanctions, May 2002, available at http://www.oecd.org/ (visited on 10 Jul. 2008).
- 107.
Korea’s Won 50 billion (the exchange rate is calculated as KW 1000 equal to US $1 in this thesis for its convenience). The school-uniform price-fixing had maintained from the end of 1998 until 2001 for two-and-a-half year, thereby causing 2.5 million students $ 125 million, or $ 50 per purchaser. KFTC, press release: KW 11.5 billion (US $ 11.5 million) surcharge and criminal reference to four corporations and seven individuals involved in price-fixing and interference in consumers’ bid (including bid-rigging ) among school-uniform producers and distributors [교복제조 유통업체들의 가격담합 및 공동구매 방해 등에 대해 총 115억원 과징금 부과, 법인 4개 및 사업자 7인을 형사고발], 4. para.1 (May 2001), available at http://www.kftc.go.kr (visited on 10 July 2008).
- 108.
The damage calculated by KFTC is KW 183.7 billion for the 5 years which amount to around US $ 184 million.
- 109.
KFTC (2004). See also Ye-Rang Hwang, Seoul District Court Decided that price-fixing damages, US$ 58, should be compensated to individual purchaser [교복값 담합 5만8천원씩 배상하라], The Hankyoreh, 20 June 2005, available at http://www.hani.co.kr (visited on 29 Jan 2007).
- 110.
OECD (2002), 6.
- 111.
Appalachian Coals, Inc. et al. v. United States, 288 U.S.344, 53 S.Ct. 471 (1933).
- 112.
Sugar Inst., Inc. v. United States, 297 U.S. 553 (1936), aff’ing 15 F.Supp. 817.
- 113.
Rudolph (1996), pp. 136–139.
- 114.
Jamil Anderlini, Foreign investors fear China law to curb monopolies, Fin. Times at 5 (31 Aug. 2007). In keeping with the government’s commitment to improving the livelihood of more than 800 million rural citizens, China’s first anti-monopoly law does not cover the agricultural sector, allowing farms to form cooperatives, such as cartel, that can market their products. The government protects many state-own monopolies by separate regulations in areas including petrochemicals, coal, and power.
- 115.
LeClair (2000), 81–83. The exceptions are bauxite and petroleum.
- 116.
International Coffee Agreement (ICA) which specified a price range through export quotas for reducing price and supply fluctuations but ended up with high price lost price control by exporters supplying the excess production over the limit to nonmember countries with cheap price. Id. at 58–61. International Cocoa Agreement failed to either stabilize or raise prices due to oversupply of non-participants and entry of new producers. See id. at 63–67. Organization of Petroleum Exporting Countries (OPEC ) is thought to lose its significant price control back in 70s due to conservation efforts of industrialized countries. Shift to alternative energy sources such as natural gas and coal and the increased number of non-member countries with expanding their output as well as new producers. Id. at 67–71.
- 117.
Baumol (2001), 732.
- 118.
Id.
- 119.
Id. at 732–733.
- 120.
Lewis H. Goldfarb et al. v. Virginia State Bar et al. 421 U.S. 773, 95 S.Ct. 2004 (1975).
- 121.
Price-fixing or its variation restraining price-competition is per se illegal. Goldfarb et al. v. Virginia State Bar et al. 421 U.S. 733 (1975), National Society of Professional Engineers v. United States, 435 U.S. 679 (1978), Arizona v. Maricopa County Medical Society, 457 U.S. 332 (1982), FTC v. Superior Court Trial Lawyers Association, 493 U.S. 411 (1990). In a exceptional case, the Supreme Court requires in-detailed examination under the rule of reason standard for California Dental Association’s ban on price advertising. California Dental Association v. FTC, 526 U.S. 756 (1999).
- 122.
Korea’s Omnibus Cartel Repeal Act: Regulating Undue Concerted Activities Exempt from the Application of the Monopoly Regulation and Fair Trade Act (hereinafter OCRA), Law No. 5815 (5 Feb. 1999).
- 123.
A commodity in the ICAs means a primary commodity, any product of farm, forest, or fishery or any mineral in its natural form or which has undergone such processing as is customarily required to prepare it for marketing in substantial volume in international trade. See Art. 56 para. 1. of the Havana Charter.
- 124.
Christopher Gilbert, International Commodity Agreements, p. 2 (14 Jan. 2005), available at http://grade.unitn.it/people/gilbert/file/Attachment_10.pdf (visited on 10 Jul. 2008).
- 125.
Kabir-ur-Rahman (1982), p. 9.
- 126.
Gilbert (2005), at 14.
- 127.
Id. at 13–14.
- 128.
Recently a proposal for the organization of natural gas producing countries, led by Russia, was seriously discussed among major exporting countries. Meanwhile, OPEC demonstrated an increasing influence on global crude oil market. Refer to 2(3).
- 129.
Common Fund for Commodities (CFC), a UN special agency for financing and supporting commodity trade, was established for supporting commodity development projects, one of which include commodity market risk management or price-management for reliability of supply. See CFC, Current Trends and the New Development Role of Commodities, 7–8 (Nov. 2006), available at http://www.common-fund.org/download/actualiteit/CT06jelle.pdf (visited on 10 July 2008) and Fig. 3, section of the Decision I of the Governing Council of the Common Fund at its Seventh Meeting in Dec. 1995, Decision I (VII/ 1995). See id., at 24, para. 8 of U.N. General Assembly (GA) Resolution A/57/236 (Dec. 2002).
- 130.
According to CFC, the CDDCs are defined as the developing countries for which 50 % or more of all merchandise exports are made up of non-oil commodities. Oil is omitted for the following reasonable grounds; (1) most oil exporter meet a qualitatively different challenge from CDDCs and (2) the unique high value of oil can distort export composition. CFC (2006), at 10.
- 131.
For example, Argentina, Brazil, Thailand, Malaysia and recently Vietnam belong to such Commodity Developers group. Id. at 8.
- 132.
See Scherer (1994), p. 54.
- 133.
Edward (1994), 22 Denv. J. Int’l L.& Pol’y 530.
- 134.
Id. at 530. Production cycles limit the ability of an international commodity agreement to control supply. For instance, coffee plants require 10 years to reach full maturity.
- 135.
Id. at 529–530.
- 136.
Refer to II. 8. of this Chapter.
- 137.
The right is acknowledged in UN GA Resolution on Permanent Sovereignty over Natural Resources, Art. 31, 33 and 34 of Charter of Economic Rights and Duties of States, Declaration and Program of Action on the Establishment of a NIEO, and UN Conference on New & Renewable Sources of Energy. The economic development of the resource-producing countries has been protected as the principle of UN Charter. Refer to Chap. 3. NIEO.
- 138.
CFC provided financial support, around total US $ 3.5 million, to price risk managements of cocoa, coffee, cotton and pilot cotton in six cases in 2001. See id. at 16, 17, 20, and 21.
- 139.
International Commodity Bodies (ICBs) are intergovernmental organizations which concentrate on specific commodities through consultations between consumers and producers, and analyses of market developments. Annex IV provides 25 ICBs. See id. 7 and 30–31.
- 140.
Andrew England, Gas exporters launch pricing study, Fin. Times, April 10, 2007, at 2. Russia, Algeria, and Qatar, responsible of 60 % of the world gas exports, reached the decision to operate a committee to study gas pricing policy of the Gas Exporting Countries Forum (GECF). See also Russia, Qatar eye OPEC -style natural gas cartel: Reserves rich countries seek ways to influence global market, Associated Press (12 Feb 2007), available at http://www.msnbc.msn.com/id/17116262/.
- 141.
Sub-para. (h). Ad Art. XX subpara. (h) extends the exception to any commodity agreement which conforms to the principles approved by the Economic and Social Council in its resolution 30 (IV) of 28 March 1947. However, the exception, although it opened a large loophole, made little practical effects because such agreements were hard to make. Only wheat and sugar agreements had been made effective. Bronz (1956), 69 Harvard L. Rev. 440, pp. 466–467.
- 142.
CFC (2006), 27.
- 143.
See id.
- 144.
para. 42 of 2003 Almaty Conference.
- 145.
Raphael Minder and Joe Leahy, Asia battles with surging food costs, Fin Times, at 9 (10 Jan 2008); U.N. General Assembly, Report of the Secretary-General, International trade and development, para. 4 A/62/266 (62nd sess.) (16 Aug. 2007).
- 146.
A few developing countries, so-called emerging markets, fall on the Commodity Developers (CDs). They are leading exporters of higher value commodities for which demand is expanding. See CFC (2006), p. 8.
- 147.
Id., at 7. The unit price of commodities from CDDCs had been lower during 2003–2005 than the average world unit price for 12 out of 16 commodities. The reason of such low prices is inferred due to lower quality products. See also id. at 10.
- 148.
FAO Newsroom, Crop Prospects mixed for low-income food-deficit countries in 2007: 28 countries face food shortages, available at http://www.fao.org/newsroom/en/news/2007/1000628/inde.html.
- 149.
Krishna Guha and James Politi, Zoellick calls for fight against hunger to be global priority,Fin Times, 5 (24 Jan. 2008).
- 150.
Edward (1994), 532.
- 151.
Id. at 531–532. Quill illustrates the collapse of the Int’ Tin Agreement (ITA). The ITA was under a severe dispute between consumers from the North, including the U.S. as the biggest consumer, and producers from the South by changing its objective from moderating price-fluctuation and developing efficient production method to a remunerative return to producers. See id. at 515–518.
- 152.
Less DCs are distinguished from the least developed countries (LDCs) designated by the UN. The less DCs are mostly middle-income and low-income developing countries including LDCs. The major petroleum-exporting countries, major exporters of manufacturers and high-income developing countries are excluded from the less DCs. The less DCs are made up of the ACP group. Refer to Chap. 3. III. 1. for the category of countries.
- 153.
Brown (1994), pp. 369–370. He cites the statement of the former Secretary of State, G. Shultz, in Rio de Janeiro at a conference sponsored by Brazilian business groups.
- 154.
Mandelson, Brussels cannot offer ACP unilateral trade access, FT (12 Dec. 2007).
- 155.
Andres Bounds and Laura Dixon, EU to dilute trade deals to avert crisis, FT (19 Nov. 2007). The literature on preferences highlight.
- 156.
Bounds, Two African nations refuse to join EU trade deal, FT (4 Dec. 2007).
- 157.
Edward (1994), 536: Brown (1994), 396. Brown classifies DCs into Newly Industrialized Countries (NICs) and the least developed Fourth World of Asia and Africa, which falls on the LDCs in this thesis. He foresees that, while NICs may join with Japan under a Asian trading bloc, the Fourth World states will be more isolated than ever.
- 158.
Brown (1994), 169.
- 159.
Brown (1994), at 362. UNCTAD have been less than satisfied with the scope of the GSP as well as with its ultimate benefit because not all DCs are covered and each advanced country provides too different and complicated schemes to evaluate the closeness to its original goal.
- 160.
CFC (2006), p. 11.
- 161.
Brown (1994), p. 382. See also Alan Beattie, Green Barricade, FT 7 (24 Jan. 2008). The border tax for carbon emission might play the useful role of bargaining strategy in trade negotiation table while the imposition of actual direct tax on imports from under-regulated countries is difficult to be implemented fully due to complexities of global manufacturing system and local regulations in the light of WTO rule.
- 162.
Marine Mammal Protection Act of 1972 (MMPA), Pub. L. No. 92-522, 86 Stat. 1027 (21 Oct. 1972). Sec.101(a)(2) stated that the incidental kill or serious injury of marine mammals permitted in the course of commercial fishing be reduced to insignificant levels approaching a zero rate.
- 163.
In the eastern tropical Pacific Ocean where dolphins and tuna are known to swim very closely together and dolphins are encircled with purse-seine nets to catch the tuna underneath, when the nets are withdrawn, dolphins are ensnared in them and/or trapped below the surface where they suffocate.
- 164.
§ 102(a)(1) of the MMPA.
- 165.
§ 106(a).
- 166.
§ 102(a)(2)(B).
- 167.
§ 101(a)(2)(B).
- 168.
GATT Dispute Panel Report, U.S.-Restriction on Imports of Tuna, DS21/R, 5.18 (16 Aug. 1991).
- 169.
Connor (2003), p. 1.
- 170.
Resch (2005), p. 3.
- 171.
See id. p. 6.
- 172.
Resch, id, p. 4; Connor and Helmers (2007).
- 173.
However, the public cartels were treated by different rules from private cartels under international law. The inter-governmental producers’ associations (IPAs) in a clearer term belongs to the public cartel.
- 174.
Resch (2008), p. 14.
- 175.
Connor and Helmers (2007).
- 176.
Stocking and Watkins (1946), pp. 4–5. The tentative results of their research revealed that 87 % by value of mineral products sold in the U.S. in 1939, 60 % of agricultural products, and 42 % of manufactured products were cartelized.
- 177.
Connor and Helmers (2007), at 48. Hundreds of international cartel s operated in the interwar period, affecting nearly 50 % of international merchandise trade.
- 178.
See id. at 1. The 40 international cartel s were only the ones involved by Germany. Great Britain was involved in 22 of them.
- 179.
Id. at 6–8.
- 180.
OECD (2002), at 7.
- 181.
Connor (2003), at 10–11. See Connor and Helmers (2007), p. 8. Connor and Helmer revealed 22 % of total international cartel s came out in the area. See also Connor (2003), at 4 and 11. Although Connor defines an ‘international cartel’ as the cartel of which members include foreign nationality or foreign-based headquarter, he mentions that more than 50 % of the international cartel affects more than two continental market.
- 182.
Refer to supra 2.2 B. Disadvantage of Cartels.
- 183.
Connor and Helmers (2007), at 12–13. Cartels working in global and West European area occupies 76 % (respectively 37.5) of 40 biggest cartels. The U.S. cartels have 20 %. While none was active only in Asia, 2 cartels were in South America and Oceania respectively.
- 184.
See id. at 3–4. ‘International cartel’ means a cartel consisting of a member with foreign nationality or foreign headquarter while ‘global’ means that effect of the cartel covers more than one continent. Connor and Helmers mentioned that 40 North American cartels’ median affected sales including those operating in both U.S. and Canada were $ 0.9 billion (900 million). Id. at 14–15. On the other hand, Connor’s prior research of 55 international cartel s indicated, at 11, that the international cartels affected at least 211 billion, thereby causing $ 3.65 billion per cartel in Table 5. See id. at 5.
- 185.
Id. at 13. Global cartels lasts for the longest year (6.0 median years), followed by EU-wide cartels (5.5), single nation in EU (3.5). See id. at 11.
- 186.
Id. at 21.
- 187.
Id. See Connor (2003), at 11. Average overcharge in 32 cases with accurate information was around 30 % of sales. Similarly, the average overcharge of 98 international cartel s with incomplete data, was 28 % of affected sales. Meanwhile, median overcharges for cartels, both domestic and international, are between 15 and 20 % since a domestic cartel places less overcharge than an international one. See also OECD Global Forum on Competition (GFC) (2003), pp. 4–7.
- 188.
See Chap. 2. 2. 2. B(5).
- 189.
Multiplying affected sales by overcharge rate is CD of a global cartel(s).
- 190.
See OECD GFC (2003), 7 and Annex C at 27–28. China (6500), Estonia (639), Latvia (0.7 % of annual turnover), and Peru (1800 per each respondent and 900) specified the amount of imposed fines (EUR). For in-detail hurdles, refer to III. 3. (3).
- 191.
Graphite electrodes are ceramic-moulded columns of graphite used in the production of steel in electric arc furnaces through conducting electric current into a furnace accompanied with high temperature.
- 192.
The total production is based on 1998 statistics. The market share data comes from the in-house report of SGL in Nov. 1996. KFTC, 심결 [Decision], 1.나.(2)(가)(2002국협0250) (Apr. 4, 2002).
- 193.
See id., 2.가.(3).
- 194.
Europa, Press Release: Commission Fines Eight Companies in Graphite Electrode Cartel (July 18, 2001), available at http://europa.eu/rapid (visited on 1 Apr. 2008).
- 195.
OECD, Hard Core Cartels, pp. 35–36 (2003).
- 196.
Canada Competition Bureau (CB), New Release: Mitsubishi Fined $1,000,000 for Aiding and Abetting Graphite Electrode Cartel (12 May 2005), available at http://www.competition bureau.gc.ca (visited on 25 Sep. 2007).
- 197.
Followings are in-detail sentences: former president with US$ 1.25 million and 17 month jail, former employee with $ 1 million and 9 month jail, and president of SGL Carbon with $10 million. KFTC (2004), 1.다. <Table 3>.
- 198.
Total fine of European Court of Justice was Euro 195.7. Europa, Press release: Competition: Commission welcomes judgments of the Court of Justice in SGL Carbon and Showa Denko Cases (Graphite Electrodes cartel) MEMO/06/258 (29 June 2006). Exchange rate of US$ 1.00 equals to Euro 0.7095 as of 24 Sep. 2007.
- 199.
KFTC (2004), Table 3; Industry Canada, News Release: Nippon Carbon Pleads Guilty to Participating in International Graphite Electrodes Cartel (8 Dec 2005), available at http://www.ic.gc.ca (last visited on Sep. 25, 2007); Canada CB (2005). Exchange rate of currency of US$ 1.00 as of 24 Sep. 2007 is CD$ 1.0002, which is almost the same value.
- 200.
Two individuals were with no jail sentence but fine of a total CD$ 0.12 million. Canada CB (2005).
- 201.
The Attorney General of Canada, Statement of Allegations by the Attorney General of Canada, para. 23 (2005).
- 202.
KR W 8,812 million equals to US $ 9,567,861 dollar at currency exchange rate (US$ 1 = KRW 921) as of 24 Sep. 2007.
- 203.
See id. at 5.
- 204.
For example, import price of vitamin E in South Korea increased up by 46 % from 1989 until 1998, but dropped by 52 % to below the original price of 1989. KFTC, Press Release: KFTC imposing surcharges on international vitamin cartel [보도자료: 공정위 비타민 국제카르텔에 과징금부과], at 8 (2003).
- 205.
The private action of foreign direct purchasers was, however, dismissed on the lack of jurisdiction because Foreign Trade Antitrust Improvements Act of 1982 (FTAIA) could not give rise to a claim from foreign injury. Hoffman-La Roche LTC et al. v. Empagran et al., 124 S.Ct. 2359 (2004).
- 206.
OECD (2002), 35.
- 207.
The Brazilian eight-year-long investigation under the hardship of gathering information led to the imposition of fine, total US$ 4.3 million or 15 million Brazilian reais. Although the conspiracies affected many regional markets in the world, the penalties were issued mostly from developed countries. OECD (2003), at 37–38.
- 208.
Id. at 34–35.
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Lee, J.S. (2016). Defining a Cartel and Analyzing Its Effects. In: Strategies to Achieve a Binding International Agreement on Regulating Cartels. Springer, Singapore. https://doi.org/10.1007/978-981-10-2756-7_2
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