Hostname: page-component-78c5997874-s2hrs Total loading time: 0 Render date: 2024-11-10T06:14:19.864Z Has data issue: false hasContentIssue false

Sectoral Influence on Competition Legislation: Evidence from the Cartel Registers, 1920–2000

Published online by Cambridge University Press:  08 February 2019

Abstract

Legislation that required the registration of firms’ anticompetitive agreements (cartel registers) to reveal, and sometimes regulate, anticompetitive behavior was relatively common in many nations before 1975. Examining the introduction of these registers in sixteen mostly OECD countries between 1920 and 2000 reveals which industries and sectors appeared to minimize successfully the impact of the legislation in their jurisdiction. We find considerable variation, but in most countries, the agriculture and export sectors were especially successful in avoiding or delaying the application of a register in their areas of interest.

Type
Research Article
Copyright
Copyright © The President and Fellows of Harvard College 2019 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Footnotes

The authors are grateful for insightful comments from several colleagues, two anonymous referees and the editors of Business History Review.

References

1 Fellman, Susanna and Shanahan, Martin, eds., Regulating Competition: Cartel Registers in the Twentieth-Century World (Oxon, U.K., 2016)Google Scholar. This article extends the authors’ work by explicitly assessing and comparing the influence of specific interest groups that shaped the register legislation in sixteen countries.

2 Schröter, Harm G., “Losers in Power-Plays? Small States and International Cartelisation,” Journal of European Economic History 39, no. 3 (2010): 527–55Google Scholar.

3 On average, the registers remained in force for over thirty years. Examining interest group influence on subsequent amendments can also provide insights. See O'Brien, D. P., “Competition Policy in Britain: The Silent Revolution,” Antitrust Bulletin no. 27 (Spring 1982): 217–39Google Scholar.

4 Fellman and Shanahan, Regulating Competition.

5 Our analysis, however, only examines one form of competition legislation.

6 Of the thirty-five current members of the Organisation for Economic Co-operation and Development (OECD), fourteen had cartel registers during the twentieth century. The two non-OECD countries with registers after 1945 were India (1969) and Pakistan (1970). Other countries that had cartel registers include Hungary, Poland, Czechoslovakia, Yugoslavia, Italy, and Bulgaria, but these are omitted due to lack of information. Registers in the eastern European countries were abolished after World War II, when these countries became part of the socialist bloc.

7 The precise number remains vague, due to delays in reporting legislative changes to international organizations such as United Nations Conference on Trade and Development (UNCTAD), together with situations where register legislation may exist but is unenforced.

8 Martin Shanahan and Susanna Fellman, “Cartel Registers around the World,” in Fellman and Shanahan, Regulating Competition, 113–32.

9 Edwards, Corwin D., Control of Cartels and Monopolies: An International Comparison (New York, 1967), 1524Google Scholar.

10 Jones, Eliot, “The Webb-Pomerene Act,” Journal of Political Economy no. 9 (Nov. 1920): 754–67CrossRefGoogle Scholar. While the Webb-Pomerene Act covered only a small proportion of exporting U.S. firms, and the U.S. economy, for competitors outside the United States, the perceived threat of U.S. cartels was large. See, for example, Round, Kerrie A., Shanahan, Martin P., and Round, David K., “Anti-cartel or Anti-foreign: Australian Attitudes to Anti-competitive Behaviour before World War I,” Australian Journal of Politics and History 56, no. 4 (2010): 540–59CrossRefGoogle Scholar.

11 Thorelli, Hans B., “Antitrust in Europe: National Policies after 1945,” University of Chicago Law Review 26, no. 2 (1959): 222–36CrossRefGoogle Scholar; Edwards, Control of Cartels; Timberg, Sigmund, “Restrictive Business Practices: Comparative Legislation and the Problems That Lie Ahead,” American Journal of Comparative Law 2, no. 4 (1953): 445–73CrossRefGoogle Scholar.

12 Plummer, Alfred, International Combines in Modern Industry (London, 1934), 167Google Scholar. This perception was rejected by postwar analysts, like Corwin Edwards.

13 Marco Bertilorenzi, “Legitimising Cartels: The Joint Roles of the League of Nations and of the International Chamber of Commerce,” in Fellman and Shanahan, Regulating Competition, 30–47.

14 Bertilorenzi, “Legitimising Cartels,” 30–47.

15 Boje, Per and Kallestrup, Mogens, Marked, ervervsliv og stat: Dansk konkurrencelovgivning og det store ervervsliv (Aarhus, 2004)Google Scholar; McGowan, Lee, The Antitrust Revolution in Europe: Exploring the European Commission's Cartel Policy (Cheltenham, U.K., 2010), 64CrossRefGoogle Scholar.

16 Timberg, “Restrictive Business Practices.”

17 Similarly, several state utilities and government services in areas including health, education, and postal services were viewed as having positive social benefits and were not expected to be run as private businesses generating returns for shareholders. This was one reason why such activities were outside the scope of the registers when they were introduced.

18 Harding, Christopher and Joshua, Julian, Regulating Cartels in Europe: A Study of Legal Control of Corporate Delinquency, 2nd ed. (Oxford, 2010), 40CrossRefGoogle Scholar.

19 Leiserson, Avery, “Interest Representation in Administrative Regulation,” Annals of the American Academy of Political and Social Science no. 221 (May 1942): 7886CrossRefGoogle Scholar; Leiserson, Avery, “Problems of Representation in the Government of Private Groups,” Journal of Politics 11, no. 3 (1949): 566–77CrossRefGoogle Scholar.

20 Salamon, Lester M. and Siegfried, John J., “Economic Power and Political Influence: The Impact of Industry Structure on Public Policy,” American Political Science Review 71, no. 3 (1977): 1026–43CrossRefGoogle Scholar.

21 Useem, Michael, “Business and Politics in the United States and United Kingdom: The Origins of Heightened Political Activity of Large Corporations during the 1970s and Early 1980s,” Theory and Society 12, no. 3 (1983): 281308CrossRefGoogle Scholar; Leiserson, “Interest Representation”; Wilks, Stephen, “The Prolonged Reform of United Kingdom Competition Policy,” in Comparative Competition Policy: National Institutions in a Global Market, ed. Doern, G. Bruce and Wilks, Stephen (Oxford, 1996), 139–84Google Scholar.

22 Edwards, Control of Cartels, 19, 22.

23 On this concept, see Compston, Hugh, “Beyond Corporatism: A Configurational Theory of Policy Concertation,” European Policy of Political Research 42, no. 3 (2003): 787809CrossRefGoogle Scholar. Examples in business history research include Gilens, Martin and Page, Benjamin I., “Testing Theories of American Politics: Elites, Interest Groups and Average Citizens,” Perspectives on Politics 12, no. 3 (2014): 564–81CrossRefGoogle Scholar; and Mercer, Helen, “The Making of the Modern Retail Market: Economic Theory, Business Interests and Economic Policy in the Passage of the 1964 Resale Prices Act,” Business History 59, no. 5 (2017): 778801CrossRefGoogle Scholar.

24 See also Galbraith, John K., The Anatomy of Power (Boston, 1983)CrossRefGoogle Scholar.

25 Richardson, Jeremy, “Government, Interest Groups and Policy Change,” Political Studies 48, no. 5 (2000): 1006–25CrossRefGoogle Scholar.

26 McGowan, Lee, The Antitrust Revolution in Europe: Exploring the European Commission's Cartel Policy (Cheltenham, U.K., 2010)CrossRefGoogle Scholar.

27 Fels, Allan and Ng, Wendy, “Rethinking Competition Advocacy in Developing Countries,” in Competition Law and Development, ed. Sokol, D. Daniel, Cheng, Thomas K., and Lianos, Ioannis (Stanford, 2013), 182–98CrossRefGoogle Scholar. Daniel J. Gifford and Robert T. Kudrle suggest that U.S. authorities are less vulnerable to external influence than their peers in Europe. Gifford and Kudrle, “Antitrust Approaches to Dynamically Competitive Industries in the United States and the European Union,” Journal of Competition Law and Economics 7, no. 3 (2011): 695731CrossRefGoogle Scholar.

28 Bernhagen, Patrick and Bräuninger, Thomas, “Structural Power and Public Policy: A Signaling Model of Business Lobbying in Democratic Capitalism,” Political Studies 53, no. 1 (2005): 4364CrossRefGoogle Scholar; Mahoney, Christine, “Lobbying Success in the United States and the European Union,” Journal of Public Policy 27, no. 1 (2007): 3556CrossRefGoogle Scholar.

29 Susanna Fellman, “Creating the 1957 Cartel Law: The Role of Pressure Groups on Finland's Competition Policy and Cartel Registration,” in Fellman and Shanahan, Regulating Competition, 88–110; Bernitz, Ulf, Konkurrens och priser i Norden: En komparativ studie av konkurrens- och prislagstiftningens syften och medel i de nordiska länderna (Stockholm, 1971), 121–23Google Scholar.

30 Dür, Andreas and Bièvre, Dirk De, “The Question of Interest Group Influence,” Journal of Public Policy 27, no. 1 (2007): 112CrossRefGoogle Scholar; Mahoney, “Lobbying Success”; Woll, Cornelia, “Leading the Dance? Power and Political Resources of Business Lobbyists,” Journal of Public Policy 27, no. 1 (2007): 5778CrossRefGoogle Scholar. Examining sector “influence” is effectively assessing how each sector uses their “power.” The logical and practical issues in doing this are outlined in the classic by Lukes, Steven, Power: A Radical View (London, 1974)CrossRefGoogle Scholar.

31 Dür, Andreas, “Interest Groups in the European Union: How Powerful Are They?West European Politics 31, no. 6 (2008): 1212–30CrossRefGoogle Scholar.

32 Kollman, Ken, Outside Lobbying: Public Opinion and Interest Group Strategies (Princeton, 1997), 35Google Scholar.

33 Bernhagen and Bräuninger, “Structural Power.”

34 Dür, “Interest Groups,” and following March, James G., “An Introduction to the Theory and Measurement of Influence,” American Political Science Review 49, no. 2 (1955): 431–51CrossRefGoogle Scholar.

35 Dür, “Interest Groups,” 562.

36 Dür, 566.

37 We also tested for the association between economic factors (structure of economy, GDP per capita, etc.) and other factors (such as cultural and legal tradition, geographic region, classifying between coordinated or liberal market economy) and the adoption of a cartel register. We found no clear patterns of association between these and the introduction of register legislation.

38 This approach also allows identification of situations where governments did, or did not, withstand interest group pressure and of groups that were particularly dominant. See Schneider, Gerald and Baltz, Konstantin, “Domesticated Eurocrats: Bureaucratic Discretion in the Legislative Pre-negotiations of the European Union,” Acta Politica 40, no. 1 (2005): 127CrossRefGoogle Scholar.

39 Corwin D. Edwards's 1967 work serves as the starting point for our further investigations using OECD and other sources. Edwards, a professor of economics, was chairman of the U.S. Policy Board of the Antitrust Division (1939–1944) and head of the State-War Mission on Japanese Combines (1946). Smith, Robert E., “The Veblen-Commons Award: Corwin D. Edwards,” Journal of Economic Issues 13, no. 2 (1979): 279–84Google Scholar.

40 Grossman, Matt, “Interest Group Influence on US Policy Change: An Assessment Based on Policy History,” Interest Groups and Advocacy 1, no. 2 (2012): 171–92CrossRefGoogle Scholar.

41 Shanahan, Martin P. and Round, Kerrie A., “Creating the ‘Secret Register’: The Background to the Register of Trade Agreements in Australia, 1967–1974,” Entreprises et Histoire 76, no. 3 (2014): 7291CrossRefGoogle Scholar.

42 Collinge, John, The Law Relating to the Control of Competition, Restrictive Trade Practices and Monopolies in New Zealand (Wellington, 1969), chap. 1Google Scholar.

43 Choi, Yo Sop, “The Enforcement and Development of Korean Competition Law,” World Competition 33, no. 2 (2010): 301–15Google Scholar.

44 Dür, “Interest Groups”; March, “An Introduction.”

45 Legislative inclusions and exclusions in each country did not always exactly align with these boundaries, so these categories are somewhat subjective. There are also potential overlaps with some export sectors.

46 Edwards, Control of Cartels, 55.

47 Swinnen, Johan F. M., “The Growth of Agricultural Protection in Europe in the 19th and 20th Centuries,” World Economy 32, no. 11 (2009): 14991537CrossRefGoogle Scholar; Bellemare, Marc F. and Carnes, Nicholas, “Why Do Members of Congress Support Agricultural Protection?Food Policy 50 (Jan. 2015): 2034CrossRefGoogle Scholar; Grossman, Gene M. and Helpman, Elhanan, “Protection for Sale,” American Economic Review 84, no. 4 (1994): 833–50Google Scholar; Rodrik, Dani, “Political Economy of Trade Policy,” in Handbook of International Economics, vol. 3, ed. Grossman, Gene and Rogoff, Kenneth (Amsterdam 1995), 1457–94Google Scholar.

48 Sigmund Timberg highlights the ability of farmers and export groups to achieve “self-protection.” Timberg, “Restrictive Business Practices.”

49 Swinnen, Johan F. M., “The Political Economy of Agricultural and Food Policies: Recent Contributions, New Insights, and Areas for Further Research,” Applied Economic Perspectives and Policy 32, no. 1 (2010): 3358CrossRefGoogle Scholar.

50 Parliamentary papers and debates remain a relatively untapped source of information for business historians.

51 Fellman, “Creating the 1957 Cartel Law.”

52 The final legislation passed quickly after the assassination of President Park Chung-hee despite industry resistance. Longstanding opponents could not resist the reforms any longer. J. Choi, “Policy-Making and Policy Implementation: The Origin and the Behavior of the Antitrust System in Korea” (PhD diss., University of Michigan, 1989), 67–74; Choi, Yo Sop, “The Rule of Law in a Market Economy: Globalisation of Competition Law in Korea,” European Business Organization Law Review 15, no. 3 (2014): 419–37CrossRefGoogle Scholar.

53 Jan-Otmar Hesse and Eva-Maria Roelevink, “Cartel Law and the Cartel Register in German Twentieth-Century History,” in Fellman and Shanahan, Regulating Competition, 191–207. The authors find that the prelegislative debates oscillated between regulations based on the abuse principle and those based on the prohibition principle.

54 Fulda, Carl H. and Till, Irene, “An Antitrust Policy for India,” The Antitrust Bulletin 13, no. 2 (1968): 373–94Google Scholar; Rampilla, Narayana R., “A Developing Judicial Perspective to India's Monopolies and Restrictive Trade Practices Act of 1969,” The Antitrust Bulletin 34, no. 3 (1989): 655–82Google Scholar.

55 The “Histadrut companies” within the Israel trade union movement had connections with the Labor Party. Kestenbaum, Lionel, “Israel's Restrictive Trade Practices Law: Antitrust Misadventures in a Small Developing Country,” Israel Law Review 8, no. 3 (1973): 411–65Google Scholar.

56 Hoffmann, Gerhard, “The Austrian Cartel Law: Principles and Background,” Antitrust Bulletin 14, no. 1 (1969): 249–78Google Scholar.

57 Wilhelm Thagaard was a liberal politician, lawyer, and, later, director general of the Norwegian Price Directorate. “Wilhelm Thagaard” Om Norsk biografisk leksikon [Norwegian biographical lexicon], https://meta.snl.no/Om_Norsk_biografisk_leksikon. Sir Garfield Barwick was the attorney general of Australia and later Chief Justice of the High Court of Australia. David Marr, Barwick (Sydney, 2005).

58 Hesse and Roelevink, “Cartel Law.”

59 Fellman, “Creating the 1957 Cartel Law.”

60 Wilks, “Prolonged Reform.”

61 This occurred in Australia, for example. Shanahan and K. Round, “Creating the ‘Secret Register.’”

62 Although involving some judgment, for Norway, we date the initial Trust Commission from 1916; Denmark, Trustlov 1931; Sweden, 1945 Trust Commission (if estimated from the commission's outline of 1936, or approximately 10 years); United Kingdom, Monopolies Commission 1947; Netherlands, 1951 Suspension Act; New Zealand, 1954 Price Tribunal Inquiry; Israel, 1957 Commission; Spain, 1960 Stabilization Plan Program; Australia, Government 1960 policy statement; India, Initial debate 1963; Monopolies Commission Inquiry 1964; Pakistan, 1963 Anti-Cartels Law Study Group; South Korea, 1964.

63 Partially reflecting the original League of Nations’ 1920s perspective. Espen Storli and Andreas Nybo, “Publish or Be Damned? Early Cartel Legislation in USA, Germany and Norway, 1890–1940,” in Fellman and Shanahan, Regulating Competition, 17–29.

64 Shanahan and K. Round, “Creating the ‘Secret Register.’”

65 Lilian Petit, Jarig Van Sinderen, and Peter A. G. Van Bergeijk, “How the Tortoise Became a Hare,” in Fellman and Shanahan, Regulating Competition, 66–87.

66 Bouwens, Bram and Dankers, Joost, “The Invisible Handshake: Cartelization in the Netherlands, 1930–2000,” Business History Review 84, no. 4 (2010): 751–71CrossRefGoogle Scholar.

67 Krishna Rao, P. V. and Sastry, K. P., “Restrictive Trade Practices Policy in India,” Journal of Industrial Economics 37, no. 4 (1989): 427–35Google Scholar.

68 Jaffe, Joshua, “Cartel Control in Israel,” The Antitrust Bulletin 12, no. 3 (1967): 931–48Google Scholar; Kestenbaum, “Israel's Restrictive Trade Practices.”

69 Round, Kerrie and Shanahan, Martin, From Protection to Competition: The Politics of Trade Practices Reform in Australia (Sydney, 2015), 161–91Google Scholar.

70 O'Brien, “Competition Policy in Britain”; Wilks, “Prolonged Reform.”