But cartels still happen. The temptation is there and it's easy to do. We know it happens because some companies get caught and fined. The companies generally admit nothing, but often pay the fine. And this is probably just the tip of the iceberg, the ones that are foolish enough to be easily detected and who allow a case to be built against them.
In 2002, the big five recoding companies and three of the biggest music retailers were found to be fixing CD prices. The industry was charged with keeping CD prices artificially high in the 1990s with a policy called "minimum advertised-pricing. The arrangement was that the recording companies paid for retailers' ads; in return, the stores agreed to sell CDs at above retail prices.
The lawsuit was led by state governments, and the companies agreed to pay $67.4 million and distribute $75 million in CDs to non-profits. The record company participants were Universal Music, Sony Music, Warner Music, BMG Music and EMI Group, and the retailers were Musicland Stores, Trans World Entertainment, and Tower Records.
In 2002, the British Department of Health sued a cartels of six generic drug makers for fixing prices on two of the most frequently prescribed drugs, namely the blood-thinning drug Warfarin and various penicillin drugs. Both are generic drugs, that were marked up 400% or more over their pre-cartel prices.
Auction houses Sotheby's and its rival Christie's were caught fixing fees and commissions for their services. The two dominate the field, with no third company even close. In 2001, Sotheby's ex-chairman Alfred Taubman was found guilty of conspiring with Christie's ex-chairman Anthony Tennant to fix prices for their services. Taubman was sentenced to a year in prison and was fined $7.5 million. The two companies agreed to pay $20 million to settle a class action settlement with some customers.
In 2002, three European and three Japanese companies, which together control more than 80 percent of the world's vitamin market, agreed to settle charges that they had conspired to fix prices for vitamins and vitamin products. The suit brought by New York state and others and was settled for $225 million.
NY Attorney-General Elliott Spitzer explained, "The companies met in secret, in locations around the world, to carry out illegal agreements that imposed a hidden 'vitamin tax' on shoppers that drove up weekly grocery bills and cost consumers and businesses hundreds of millions of dollars over the past decade."
The six companies are: Hoffman-La Roche Inc., BASF Corp., Aventis Animal Nutrition S.A. (formerly Rhone-Poulenc Animal Nutrition), Takeda Chemical Industries Ltd., Eisai Co. Ltd, and Daiichi Pharmaceutical Co. Ltd.
In 2002, the EU fined five companies fined for a citric acid cartel. The commission imposed fines of 135 million euros on five companies: American Archer Daniels Midland Co Inc, Swiss Jungbunzlauer AG, Swiss F Hoffmann-La Roche, German Bayer AG, Dutch Cerestar Bioproducts. Archer-Daniel-Midland hasd already had lost a similar suit in 1998 jn the US. Citric acid is used widely in the food and beverage processing, cosmetics, and chemical industries
Special mention should be given to NY Attorney General Elliot Spitzer, who has been unrelenting in cracking down on cartels and other forms of business fraud.
