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From CPI RSS: Is the Definition of a Cartel Ballooning?

The media tend to refer to gangs that produce and distribute drugs as "cartels." Of course these are not cartels as we, as antitrust lawyers, traditionally use the concept. In fact "drug cartels" seem to operate as businesses in the various regular forms we know: conglomerates, cooperatives, or "one-product firms." Note, too, that the media habitually refer to rival drug cartels, meaning that these cartels are competing fiercely. So, in the antitrust context, are these cartels? To the extent we understand the agreements underlying the drug cartels, they would not seem to be that. An antitrust assessment of the workings of drug cartels, therefore, would need to be undertaken on the basis of a "rule of reason" analysis.

One may wonder therefore why the reference to drug gangs as "cartels" seems ineradicable. Perhaps that is due to the fact that there is no set definition of the concept of a cartel. Traditionally, however, this has not been an issue in the enforcement of antitrust laws around the world. Although the concept is perhaps difficult to define, cartels have historically been easy to recognize.

The application of the cartel concept has been restrained by a number of factors. The focus on prosecuting cartels originated and was historically centered in the United States, where the cartel rules are enforced within a criminal law framework. It is almost inherent in criminal law enforcement that the legal norms that businesses and individuals have to comply with, lest they might go to jail, have to be clearly defined and curtailed. And, as one of the contributions to this issue highlights, "hard-core cartels"-those which can be prosecuted criminally-need to be "naked" and typically "covert" agreements between competitors not to compete, fix prices, or divide markets. There has been no need for a strict definition of cartels since a jury could work on the basis of the "elephant test;" in spite of the absence of a definition, cartels can be recognized instantly when spotted in the evidence

Arguably, however, the factors preventing the cartel concept from widening and becoming more blurred are no longer as pre-eminent as the concept has moved away from the U.S. criminal law framework. Numerous authorities are enforcing national or regional competition laws around the world. Many of them focus on prosecuting cartels, but the applicable governing laws diverge considerably as to procedures, institutions, and substance. Thus we are witnessing a process in which the cartel concept is arguably inflating. As the various contributions in this issue illustrate, this is a process that is going on in numerous jurisdictions worldwide.