Policy Brief: Prosecuting Cartels without Direct Evidence of Agreement

Cartels are agreements among competitors fixing prices, allocating markets or rigging tenders (bids). They are the most harmful of all types of competition law violations and should be sanctioned severely. Cartel cases are unique. The most important part of a cartel case is simply proving that such an agreement existed. But getting direct evidence of a cartel agreement can be difficult. Cartel operators work in secret and often do not co-operate with investigators. In these circumstances, circumstantial evidence can play an important role in proving the agreement.

Direct evidence of an agreement is that which identifies a meeting or communication between the subjects and describes the substance of their agreement. The most common forms of direct evidence are 1) documents (in printed or electronic form) that identify an agreement and the parties to it, and 2) oral or written statements by co-operative cartel participants describing the operation of the cartel.

Circumstantial evidence is evidence that does not specifically describe the terms of an agreement, or the parties to it. It includes evidence of communications among suspected cartel operators and economic evidence concerning the market and the conduct of those participating in it that suggests concerted action.

Circumstantial evidence is accepted in cartel cases in every country. It may be employed exclusively to prove an agreement, but it can also be used to great effect together with direct evidence. Circumstantial evidence can be difficult to interpret, however. Economic evidence especially can be ambiguous, consistent with either concerted or independent action. The better practice is to consider circumstantial evidence in a case as a whole, giving it cumulative effect, rather than on an item-by-item basis, and to subject economic evidence to careful economic analysis.

The careful, intelligent use of circumstantial evidence can significantly advance a country’s anti-cartel effort.