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38 J. World Trade 331 (2004)
Export Cartels - A Developing Country Perspective

handle is hein.kluwer/jwt0038 and id is 333 raw text is: Journal of World Trade 38(2): 331-359, 2004. © 2004 Kluwer Law International. Printed in The Netherlands. Export Cartels-A Developing Country Perspective Aditya BHATFACHARJEA* Export cartels are exempted from the competition laws of most countries. While some scholars and several World Trade Organization (WTO) Members have recently condemned such cartels, others have argued that they allow efficiency gains that actually promote competition and trade. After summarizing the contending views, and also the scanty theoretical literature on the subject, this paper reviews the treatment of export cartels in various jurisdictions and the limited empirical evidence that is available on their prevalence, efficiency justifications, and effects on international trade. Insights from economic theory are then applied to the arguments for and against export cartels, suggesting criteria that could help to determine their validity and an importing country's best response. The paper concludes that while importing countries should evaluate foreign export cartels under a rule of reason, most developing countries will be constrained by a lack of technical expertise and limited enforcement capacity. It suggests a novel approach, based on parallels with anti-dumping procedures, which would strengthen their hands. I. INTRODUCTION International cartels have attracted much attention in recent years, with competition (antitrust) agencies in the European Union and the United States having successfully prosecuted over 40 such cartels during the 1990s. Studies commissioned by the Organization for Economic Co-operation and Development (OECD) (2003a, Part II), the WTO Secretariat (Evenett, 2003), and the World Bank (revised version in Levenstein et al., 2004) summarize some of the evidence generated by these cases, and present estimates of the losses incurred by consumers in other jurisdictions, especially developing countries, as a result of the cartels' collusive price- fixing activities. And yet, despite the growing concern over international cartels comprising firms based in different countries, much less attention has been paid to export cartels based in only one country and implicitly or explicitly exempted from its competition laws. The three international studies cited above, for example, mentioned them only in passing. Many antitrust scholars as well as country representatives have * M.Phil. (Cantab), PhD (Boston). Reader in Economics, Delhi School of Economics, University of Delhi. E-mail: <aditya@econdse.org>. I thank Swati Dhingra for excellent research assistance, and T.C.A. Anant for some of the suggestions in the concluding section. The usual disclaimer applies. Copyright' 2007 by Kluwer Law International. All rights reserved. No claim asserted to original government works.

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