French cell phone cartel
While we have often stated that crude price-fixing is not as prevalent in oligopolies as might be feared, it is certainly a tempting possibility. After all, price-fixers can be caught and fined. There are so many other ways to influence the market that involve much less risk.
But price fixing cartels do get uncovered from time to time. The French antitrust authority has just fines the three leading cell phone companies in the country of price fixing. Those companies are Orange (#1, owned by France Télécom), SFR (#2, owned by Vivendi Universal), and independent Bouygues Télécom (#3). Those companies are charged with sharing confidential pricing data over six years (1997-2003) and agreed not to compete on price. The fines, a record for France, totaled $648 million.
While the companies in questions are in loud denial mode, according to an FT.com story, there is ample written evidence:
When they raided Orange France, investigators found intriguing internal documents there too, including the references to a "market share Yalta". Investigators interpreted this as a reference to the territorial carve-up carried out by Roosevelt, Churchill and Stalin towards the end of the second world war.
Another document referred to a policy of "pacifying the market".
More such suits may be on the way. According to a story in the International Herald Tribune ("French mobile firms get a big bill", 12/1/05)
European Commission antitrust officials are already investigating "roaming" charges levied by T-Mobile and Vodafone in Germany and O2 and Vodafone in Britain for overcharging on calls across borders. The French government is also deciding a separate case that alleges that mobile companies overcharge for SMS text messages.
