The cartels were the worst competition infringement that resulted in an estimated price increase of 20-40 percent, while the estimated percentage of world-wide cartels in public procurement bidding is 25 percent, international competition law experts said here on Sunday.
According to Manuel Sebastião, the President of Portuguese Competition Authority, a well-functioning market economy and business-friendly economic policies needed an effective competition component in their economic policy toolkit.
In his presentation on 'Detecting Cartels: Investigative Techniques', during the International Conference, Sebastião quoted CCP Chairperson Ms Rahat Kaunain Hassan as saying: "If you are pro-business, you have to be pro-competition," adding that fostering trade and investment, hence employment and growth, required a well-designed legal framework for competition; forceful antitrust action by the competition authority, specifically against cartels and bid-rigging and rulings by the courts in their judicial review that ensure the rule of law on competition matters.
He cited the example of Portugal where reforms had been introduced for effective enforcement of competition law, for example, introduction of a new competition law, strengthening of the Portuguese Competition Authority and, new specialised Court of Competition, Regulation and Supervision.
US competition experts appreciated the role of CCP under the guidance of Rahat Kaunain Hassan. They said that over the past three years, CCP had taken strict actions against powerful cartels despite pressure from influential groups and lobbies.
Another panellist, John K Daina, Senior Economist, Enforcement Division, Competition Authority of Kenya, said that cartels undermined the competitiveness of a country's economy.
"Unchecked cartels raise the cost of doing business, reduce firms' incentive to become more efficient and innovate, render consumers to pay higher prices without any extra benefits, while firms earn higher profits for less effort," Daina said.
Fernando M Furlan, former president of the Brazilian Competition Authority, who discussed the importance of leniency in busting cartels, said: "To date, as many as 20 leniency agreements have been concluded and many cartels sanctioned in Brazil," Furlan said.
Terming leniency the main instrument of detection and fight against cartels, Furlan said that leniency had proven to be extremely effective in detecting and busting cartels in his country and other developing countries also could benefit from this important provision.
Prof John M. Connor of Purdue University gave a presentation on 'Price Effects of International Cartels in Markets for Primary Products' in which he analysed the extent of price changes induced by privately organised international cartels that monopolised markets for primary products, besides examining the enforcement response.
Summing up the session, CCP Chairperson Rahat Kaunain Hassan said that cartels were termed a major drain on the world economy and leniency program seemed to be the single most important tool to be used by the competition agencies to detect and dismantle cartels.
"It is a concession granted to a cartel member who admits the contravention and also provides critical evidence of the alleged or otherwise cartel conduct of the accomplices and commits to abandon such behaviour.
"CCP is one of 110 competition agencies all over the world which have leniency programs in place." She mentioned CCP'S landmark decision - leniency granted to Siemens - to break cartels in switchgear and transformer markets.
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