US companies have paid more than $96 billion since 2000 to settle cartel charges and fines, a US report has found. ● Banks and pharmacy lead in “healthy competition”.
Capitalism is generally defined as a system of continuous competition in which prices are determined by supply and demand: producers of goods and services compete with each other to find buyers, each offering the most attractive prices.
These, however, are only true in theory.
In practice, competition is usually an empty letter. Mainly large companies operating in the same sector, take advantage of the high market share they hold and often make secret deals by dividing up the market and fixing the prices themselves. This is the world of cartels, illegal price fixing and other anti-competitive practices concocted in secret by corporate executives who are supposed to be rivals.
In the United States alone – where the first antitrust law was enacted in 1890 to counter the growing domination of the economy by giant business trusts such as Standard Oil – the number of cases of cartel formation detected since the start of this century exceeds 2,000 in a wide range of goods and services – from simple items like ice cream and packaged shoes to electronic components and medicines.
Companies caught illegally fixing prices and violating antitrust laws have paid a total of more than $96 billion in fines and settlement agreements since January 2000.
The startling numbers — which dispel any literature on healthy competition — point to a recent report (Conspiring Against Competition), which was produced by partners at Good Jobs First, a nonprofit research center focused on corporate accountability. businesses.
The cases studied come from three sources: a. US federal agencies, in particular the Antitrust Division of the Department of Justice, b. state attorneys general and c. private class actions.
The investigation found that of the above $96 billion paid to settle cartel charges and fines, more than a third ($33 billion) was paid by banks and investment firms, mainly for cases of illegal fixing of reference rates such as LIBOR. The industry with the next largest penalties was pharmaceuticals with $11 billion, mostly for cases of collusion to block or delay market entry of cheaper generic drugs that threatened their own proprietary formulations brand.
It should be noted that antitrust cases are rarely tried in the United States, mostly settled. The compromises found by companies in the above two sectors with federal, state and private authorities may not be unlucky, and the fact that over the past fifteen years they have been consistently in the top 3 with biggest financiers of the pre-election campaigns of American politicians.
In addition, corporate sectors caught price-fixing and topping the list of fines and settlements include: electronic components ($8.6 billion), auto parts ($5.3 billion), power generation ($5 billion), chemicals ($3.9 billion), healthcare services ($3.5 billion), and freight services ($3.4 billion).
Among companies, credit card giant Visa ($6.2 billion) is reported to have paid the most, followed by Deutsche Bank ($3.8 billion), Barclays ($3.2 billion), MasterCard (3 .2 billion dollars) and Citigroup (2.7 billion dollars). Outside of the financial sector, the biggest payers were Teva Pharmaceutical Industries, which together with its subsidiaries paid a total of about $2.6 billion for several instances of bulk generic deals. A total of 19 companies or their subsidiaries operating in the United States have paid at least $1 billion each in settlements and fines.
In addition to cases of illegal price-fixing, the investigation also uncovered 35 cases of secret company agreements to preempt workers’ wages and salaries. Among them, cases were found in which employers, such as e.g. poultry processing companies, had agreed on a uniform wage level, but also cases of exclusion agreements of workers who had been made redundant by other companies in the same sector.
Despite the colossal sums paid out in fines and settlement agreements, price-fixing scandals continue to make regular headlines. Tougher penalties, the report points out, could help reduce cartel formation, but tackling the problem effectively will likely require more aggressive measures aimed at preventing excessive market control by oligopolies.