FASE DE CONCEPTUALIZACIÓN

As a reaction to the interventionist Harvard School, the US competition en-forcement in the late 1970s and 1980s was influenced by the Chicago School (van Cayseele and van den Bergh, 2000). The Chicago school focused on efficiency and the market structure itself was irrelevant. Even a monopoly was regarded as efficient since it must be more efficient than other firms to keep the position (Voigt and Schmidt, 2005). If a firm could increase prices, the Chicago School argued, the effect would usually only be temporary since high profits would attract new entrants and the competitive response would restrain market power faster than would antitrust intervention. The Chicago School did however not want to abolish competition policy altogether but argued that horizontal agreements should be prohibited (Voigt and Schmidt, 2005). The Chicago School questioned the many rules of per se illegality and argued that many of them were harmless or even pro-competitive. Despite the Chicago School the number of cartels prosecuted in the US increased dur-ing the 1980s. By the end of the decade a leniency program was introduced in the US with the purpose of destabilising cartels by providing an incentive to leave the cartel.

In Europe, inflation and unemployment was rising in the 1970s and compe-tition policy was given less priority at a national level. As a result the cartel legislation was not strictly enforced in for example France and Germany (Buch-Hansen and Wigger, 2011). At the Community level the development was two-fold. From the mid 1970s the European Commission increased the number of cartel decisions to roughly four cases a year (Schinkel, 2007).

But, at the same time it allowed for more lenient treatment of cartels, espe-cially in the case of crisis cartels. These were cartels to reduce competition by restricting overcapacity in crisis industries. Despite these cartels being relatively few, the Commission developed conditions for when the exemp-tion should apply (European Commission, 1982). Economic arguments were hence used to define when cartels were legal. The lenient stance against car-tels was overturned in the mid 1980s and the cartel prosecution became more stringent (Buch-Hansen and Wigger, 2011).

In the 1970s litigation in the European cartel cases was limited, but this was to change. With a growing number of cartels prosecuted by the European Commission in the 1980s, the cartels started to appeal the Commissions’

decisions. In many of the appealed cases there was no doubt to the question of

collusion - the appeals were based on procedural issues (Harding and Joshua, 2010). These appeals led to major reversals for the Commission during the late 1980s and beginning of the 1990s. As a result the European Commission changed enforcement strategy (see next section).

In the 1970s Sweden, both inflation and industry concentration were raising rapidly. This motivated the government to establish several commissions to study the effects of concentration (Holmberg, 1981, p. 46). Contrary to the approach in the 1920s and the motivation in the competition law from 1956, Sweden decided to counter inflation using extensive price regulation instead of competition. Hence the Price and Cartel Board⁴¹was instructed to intensify the monitoring of prices and margins. By resorting to price regulation, there was less need for active cartel enforcement and price controls remained an important tool to fight inflation until the 1990s (OECD, 2006).

In 1978 a commission⁴²directed to review the effectiveness of the competition statutes proposed a new law (SOU, 1978:9). Although the structure of the proposal was similar to the law against restraints on competition, with few defined prohibited practices and an abuse principle for all other practices, the proposal included strong reinforcements of the law.

The commission proposed to prohibit price and market sharing cartels (be-sides the already prohibited tender cartels) and to increase the definition of tender cartels⁴³. Strong revisions were also proposed for the abuse cases where the commission suggested that the negotiation principle be replaced with prohibition and a system of fines and injunctions to improve speed and efficiency of the enforcement.

The main motivation to the proposed changes was to prevent the harmful effects of cartels. Despite the strong price control cartels were believed to increase prices. In fact, several cartels were set up with the purpose of influencing the price control board (Berg, 2011). The theory of harm was a combination of price and inefficiency effects. Cartels were seen to protect inefficient firms by establishing high prices, and as giving rise to large profits for efficient firms. Reduced competition was also seen to hinder much needed structural reforms.

The report created substantial controversy in both government and industry.

41Statens pris- och Kartelln¨amnd

42Competition investigation (Konkurrensutredningen).

43Non-binding consultations between the firms was proposed to be illegal.

The Swedish bar association claimed that prohibiting price cartels would not guarantee sufficient legal certainty and the industry argued that the law would be unpredictable and that exchange of price information was in fact pro-competitive. The industry also asserted that prohibiting market sharing could reduce efficiency-inducing cooperation that enabled the members to rationalise production, avoid over-investment and reduce distribution and marketing costs (Prop, 1981/82:165).

Due to the objections, many of the novelties were rejected in the legislative proposal with the motivation that it would be impossible for firms to know if a specific practice was illegal or not. The scope of the proposed prohibitions and exemptions were not precise enough to fulfil adequate requirements on legal certainty (Prop, 1981/82:165). The legislators feared that firms would either apply for exemption for many agreements or refrain from a practice that could have positive effects on competition. The exemption applica-tions would burden the administrative system and reduce the possibilities of fast and efficient intervention against restrictive practices that generated real harm. Instead of discussions on the scope of cartels and their harm, focus was hence shifted to legal certainty, administrative burdens and problems with identification or restrictive agreements.

The first competition law⁴⁴was therefore, just like its predecessor, based on the principle of abuse. The previous definitions of harm were transferred into the new law, and economic analysis was still an important part of the enforce-ment. Harmful restrictive practices were to be eliminated by negotiation but an important change was that the Market Court was given authority to ban practices, and order injunctions if negotiations failed (SOU, 1991:59). The new law made negligence criminal under certain conditions and increased the punishment for tender cartels to up to two years incarceration since the purchaser would not realise that competition was eliminated. In practice, no one was ever convicted to jail, but there were in total as around ten cases where fines were imposed (SOU, 2004:131).

At the end of the 1980s inflation was increasing again. But, instead of resort-ing to price control as had been the case a decade earlier, the focus was on increasing competition especially in protected sectors. Competition was to be improved by lowering lowering entry barriers and deregulation therefore

44SFS 1982:729

became one of the top priorities⁴⁵.

In the beginning of the 1970s the industry was price controlled, and the effects of cartels were therefore believed to be small. But by the end of the century cartels were found to increase prices and the theory of harm was based both on price and efficiency effects. A legal proposal prohibiting cartels was rejected and the effects-based legislation continued into the 1990s.

It was no longer questions of the effects of cartels that halted the legislative development, but legal doubts.