Competition regulators have increased their vigilance against international cartels as globalisation of world trade continues apace, Australian Competition and Consumer Commission Chairman, Professor Allan Fels, said today.
Addressing a University of Melbourne conference on trade and cooperation with the Economic Union in the new millennium, Professor Fels said that global cartels, that is, cartels organised on an international scale, had been in existence since the beginnings of international trade.
"However, there appears to have been a sharp increase in the extent of global cartel activity, or at least in its detection, in the past few years. If there has been an increase in the amount of international cartel activity, rather than just an increase in the amount that has been detected, this is probably due to the impact of trade liberalisation.
"Liberalisation is generally good for competition, but it tends to put pressure on firms that have traditionally dominated particular local markets without much international competition. Facing competition for the first time, some of them tend to get together with producers in other countries to divide up world markets and to agree on prices and output".
Professor Fels said the recent vitamins price-fixing case across the world was a 'spectacular' example.
"In Australia a proposed settlement has been put before the Federal Court which would see penalties totalling A$26 million imposed upon the companies involved. Judgment has been reserved. In the EU there has been no decision yet and the investigation is continuing.
Professor Fels said that generally speaking competition had had positive effects on promoting competition and widening consumer choice.
"However, it can be associated, in some cases, with anti-competitive behaviour on an international scale and this can pose problems for national governments which have difficulties in dealing with behaviour taking place in other countries that can affect their own economies. It is important to note that the European Union has been particularly active in trying to promote a global approach to competition policy and in promoting the inclusion of competition issues in the next round of trade negotiations at the World Trade Organisation.
Professor Fels said that the European Commission was leading the drive to find practical solutions to global problems.
"The efforts and persistence by the European Commission in exploring other, more wide ranging and more ambitious, mechanisms for achieving greater competition at the global level and promoting fair and efficient international trade, are to be commended".