The EU stated that the evidence of the cartel was based on information received under a leniency program. This is obviously the best way for a cartel to be detected, by providing immunity to anyone who comes forward and reveals the collusion.
The video tape corporations have two months to prepare their response and then argue their case. In order for the EU to prove that the cartel exists, they will need statistical accounting data that demonstrates the monopoly profits and the corporations’ lower costs by working together. This industry makes sense for a possible cartel since the companies probably have similar production costs, with a specialized product that is standard for professional video equipment. There is a lack of significant product differentiation, which simplifies negotiation and makes it easier for firms to agree on prices.
Posted by Marie Copoulos, Tiffany Luong, and Vicky Ukritnukun
1 comment:
It seems that the professional video tape industry might be in for some trouble. With such a homogeneous product and similar production costs, this case seems strikingly similar to the one explored in class (with the sketchy video tapes). While it seems that the EU has a good shot at taking the cartel down, they better have an arsenal of supporting financial data from all firms as well as the industry in order to prove uncommon profits and production levels. This case, however, is a great example of how government policy can protect social welfare through immunity agreements with cartel informants. Go get ‘em EU.
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