Can Developing Economies Benefit from WTO Negotiations on Binding Disciplines on Hard Core Cartels?

In September 2003 members of the World Trade Organization (WTO) must decide the terms of upon which any negotiations on a multilateral framework on competition policy are to be conducted. This decision will involve determining which, if any, provisions should be included in such a framework, and of particular interest here is the desirability of including of possible provisions on so-called hard core cartels.

Many developing countries have actively participated in discussions on competition policy-related matters at the WTO and they can be expected to play a full part in the deliberations in Cancun. This paper assesses the potential costs and benefits of negotiations on potential provisions for hard core cartels for developing economies and begins by reviewing the factual record in this regard.

Estimates are presented here on the likely damage done to developing countries by the forty or more private international cartels that were prosecuted by government agencies in the industrial economies in the 1990s. In the case of the international vitamins cartel, which was worldwide in scope and lasted 10 years, there is robust evidence that cartel members targeted those jurisdictions with little or no cartel enforcement for greater price rises and larger overcharges to customers. This evidence, and others, raises the question of what measures, if any, are being taken to protect developing economies' interests against this form of international anti-competitive practice.