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The Global Fight against’Cartels

Price fixing by cartels is illegal in most nations aroundthe world,

EU Antitrust Chief Wighs U.S.Style Measures

BRUSSELS-Acknowledging problems with enforcing cartels. European antitrust commissioner Neelie Kroes said she is considering measures that would  further align the European system with that of the U.S. has made busting cartels a priority, said in a speech before a legal conference that the 25-member European Union may need to adopt U.S style plea bargaining procedures to dear up a growing backlog of price fluting cases.

She also said a way.needs to be found to protect informants who give confidential information to European regulators about illegal cartel activity from later seeing that information used against them in a U.S. civil lawsuit. The emphasis in Ms. Kroes’s speech on harmonizing European rules with U.S. procedures reflects the fact that price-fixing is often an international crime. requiring collaboration between authorities. Globalization is very-much a reality of business life said Ms. Kroes, of the Netherlands.who offered her most detailed thinking yet on cartels after four months in office.

At the same time, self-interest does not drive the market all the way to the competitive outcome. Like monopolists, oligopolists are aware that increases in the amount they produce reduce the price of their product. Therefore, they stop short of following the competitive firm’s rule of producing up to the point where price equals marginal cost.

In summary, when firms in an oligopoly individually choose production to maximize profit, they produce a quantity of output greater than the level produced by monopoly and less than the level produced by competition. The oligopoly price is less than the monopoly price but greater than the competitive price (which equals marginal).

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