International Competition Law Assignment Help

1. Introduction European law, as well as the laws of most other countries, prohibit cartels expressly and punish them harshly, as considered to be the most seriouInternational Competition Law Assignment Helps breach competition. At the same time, however, the agencies responsible for the protection of competition are more and more increasing their ability to detect and successfully prosecute those implementing anticompetitive agreements, including the establishment of new work policies to counter collusion, as leniency programs. The advantage for companies to coordinate their policies in distribution and sales colluding, rather than competing against each other emerges in oligopolistic markets, i.e. markets located in an intermediate level between perfect competition and monopoly, which say in most industrial markets are present in reality. Competition in these markets is determined by a number of limited companies, such that the price and the optimal production level of each firm depends on the choices in terms of price and quantity of rivals. Thus every company, through its decisions, is capable of affecting the profit margins of competitors1 . From the theoretical point of view, when it comes to collusion in specific market prices higher than equilibrium in the absence of cooperation, undertakings engaged in collusive practices, taking as a configuration reference of the market that would implement a monopolist, are intended to distort competition and thereby increase their market power. All results in the collusive agreements are generally prohibited by the antitrust laws in the world. The collusive outcome can be achieved through various forms of agreement. Companies may agree on sale prices, on the division of production or markets or other decisions (for example 1 VeljaŶoǀski, C., ͞EuropeaŶ CoŵŵissioŶ Cartel ProseĐutioŶs aŶd FiŶes ϭϵϵϵ-ϮϬϬϵ͟, ;Case AssoĐiates: LoŶdoŶͿ, 2009, p. 15. International Competition Law 6 collusion may cover the costs of advertising or the level of quality the service). The structure of the collusive arrangements can vary, in fact collusion can occur through an organized cartel between companies (in which a central secret makes decisions for all member companies), through communications and exchange of information between rivals or acting in a noncooperative manner. The first two cases are examples of explicit collusion, while the last, in which the outcome is collusive arrives in the absence of explicit agreements, identifies with the term tacit collusion. In November 2008, the European Commission imposed fines imposed on saltier companies found guilty of collusion in the award of contracts for the supply, through coordination of policies on prices and supply strategies. Four industrial groups’ glass producers in the auto industry were imposed fines for total of almost € 1,384 million, for a cartel that controlled deliveries to all major car manufacturers in the EEA (European Economic Area)2 . The group Saint Gobain received a fine of more salt (which happens to also be the highest fine ever decided by the EC to a single company in cartel cases) amounted to € 896 million, as relapsed judged by the Commission. The group Pilkington was fined 370 million €, a group Asahi € 113.5 million and the company Soliver of a € 4.396 million3 . The case of automotive glass came in light a month later with another case which concerned the industry of paraffin waxes in the EEA, in which the Commission inflicted fines in 9 companies, for a total of approximately € 676 million, for taking part in a cartel pricing. The fine saltier, amounting to approximately € 318 million, was imposed on Sasol. This case is particularly interesting because it broke mostly because of the policy clemency adopted by the Commission, 2 Elhauge aŶd GeradiŶ, ͞Gloďal CoŵpetitioŶ Laǁ aŶd EĐoŶoŵiĐs͟, ;HartͿ, ϮϬϬϳ, pp.ϭϬϭϭ-1012. 3 D. “okol, ͞MoŶopolists ǁithout ďorders: the IŶstitutioŶal ChalleŶge of IŶterŶatioŶal AŶtitrust iŶ a Gloďal Gilded Age͟, ;BerkeleLJ BusiŶess Laǁ JourŶalͿ, Vol. ϰ.ϭ, ϮϬϬϳ, pp. ϰϲ International Competition Law 7 which provides immunity from fines for the company part of an agreement that first reveals the violation (and sentence reduction for companies later). Shell was the first company which informed the EC of the offense and who collaborated with it in order to ascertain the existence of the cartel, allowing them to obtain the exemption from the sanction, a substantial savings. As previously stated, the collusion when prices are higher than that non-cooperative equilibrium is multiple price collusion involving different levels of profit for companies, until, one gets the balance of monopoly, or cooperative equilibrium with higher prices. From what follows that undertakings to collude must find a coordinate on a single market configuration. The attainment of equilibrium allocation is simpler in the case of explicit collusion as firms communicating with each other can agree on an optimal price together and, if market conditions change due to shocks in demand or costs, chooses new price collusion4 . The coordination becomes a problem in the case of tacit collusion because, being absent communication between companies, the risk of selecting a configuration of the market which is not jointly optimal and that it can be too expensive to change the real deal. In fact, if a company used the market signaling their desire to coordinate on a higher price, this would be affected by a decrease in its market share during the inevitable period of adjustment, and still, if a company reduced its prices with the aim to coordinate on a price of lower equilibrium, this action could be interpreted as a deviation and unleash an unjustified price war. Thus, the weak point of the agreements of collusion is the instability inherent in these. If collusion was reached through a contract with legal validity, the fact that occurs a deviation would not be a big problem for companies that have complied the agreement, as these may claim

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