infonet-economy

In the context of the negotiations on the Free Trade Area of the Americas (FTAA), it has been proposed that signatories agree to enact and enforce a national law against private anti-competitive practices. This paper assesses the feasibility and desirability of such an initiative. The paper starts by documenting and discussing the experience with national anti-cartel enforcement in six jurisdictions in the Americas. In three of these jurisdictions-Brazil, Mexico, and Peru-the prosecution of cartels-including some international cartels-suggests that such enforcement efforts are, indeed, feasible. The paper then goes on to quantify the overcharges paid by Latin American economies on their imports of vitamins during the ten year-long international conspiracy to cartelize the market for such goods. The percentage increase in the import bills for vitamins of those nations that do not have active cartel enforcement regimes is found to be at least eight percentage points higher than those with such regimes. Given the magnitude of vitamins imports in Latin America, in certain jurisdictions this differential increase translates into millions of dollars of extra overcharges on an annual basis-and compares favorably with the state outlays on competition enforcement. Such considerations imply that the proposed FTAA-related initiative considered here is likely to be desirable too.