and Proposals

This paper evaluates the effectiveness of the efforts of the Antitrust Division of the U.S. Department of Justice to detect, indict, and deter horizontal collusion during 1990-2007 and offers policy suggestions likely to improve that enforcement. Division leaders emphasize that collusion is the agency's number-one priority. Paradoxically, there is evidence that the number, size, and injuriousness of discovered cartels is increasing. This is particularly true for international cartels. The number of cartel investigations has not risen appreciably. Moreover, the number of criminal Section 1 cases filed annually fell. From 1995-99 to 2004-06 cartel cases filed fell by 49%. The number of corporations charged annually dropped continuously throughout 1995-2007. There now is a significant and growing backlog of criminal investigations and unresolved matters. Although the Division is bringing fewer Section 1 cases, the monetary penalties imposed on convicted corporate price fixers have grown. The total amount of cartel fines imposed is $4.2 billion. While an impressive amount, damages recouped by U.S. private plaintiffs are roughly four times as large. Division policy statements place great weight on the deterrence value of predictably high prison sentences for convicted cartel managers. Not only the frequency but also the severity of prison sentences has increased. These trends are positive in terms of cartel deterrence