Import cartels

Nature

Import cartels involve agreements concluded among competing firms in one or several countries. Such cartels may collectively limit the aggregate amount of specified imported goods, determine the sources of supply for such imports and/or fix the prices and terms of purchase the cartel members will pay for such imports. Such activities may be: a defensive measure to achieve lower purchase prices for imported products because their importers encounter aggressive export policies pursued by suppliers through 'natural' monopolies, or export cartels or centralized State selling agencies; an aggressive measure aimed at preventing or limiting imports in order to protect members of the cartel from import competition, or to ensure that imports take place before rather than after the processing of the goods in question, or to minimize the buying prices paid by cartel members; part of an exclusive arrangement between exporters and importers of a particular product with the purpose of excluding other firms from the business. From the point of view of the developing countries, an aggressive import cartel would appear to be a most harmful activity since it could restrict the volume of exports from those countries and the range of the prices paid to them for the imports permitted.

Background

The known cases of import cartels in the developed market economy countries after World War II appear to be few in number, since in most of these countries they are either prohibited, or only authorized in certain exceptional cases, or are subject to a control of abuses under the relevant restrictive practices laws. At the end of 1970 in Japan there were three authorized import cartels with regard to the import of certain agricultural products from particular developing countries in Asia. In addition, Japan had two import-export cartels for trade in certain textile products with developing and other countries. In the case of the UK, one import cartel was approved with regard to imports of sulphuric acid. In the (then) Federal Republic of Germany there were two authorized import cartels concerned with imports of molybdenum and of tungsten. In the case of the latter two countries, the cartels were authorized as defensive arrangements. In the case of the USA there are no legal import cartels. No information is available as to whether legal import cartels exist in other countries. From time to time illegal import cartels have been found to exist in the developed market economy countries which affected trade with the developing countries. In certain cases, these arrangements have been aggressive in nature. In addition, similar illegal arrangements have been found to exist in relation to trade amongst certain developed market economy countries.

Incidence

Import cartels have been documented across multiple sectors and regions, particularly in industries where a few dominant buyers coordinate to control the terms and sources of imports. Their activities can distort international trade, restrict market access for exporters, and undermine fair competition, with significant impacts on developing economies reliant on export revenues. The global reach of such cartels has prompted investigations by competition authorities in both developed and emerging markets, highlighting their persistent and transnational nature.
In 2022, the European Commission fined several European companies for forming an import cartel in the ethylene purchasing market. The cartel, operating across several EU member states, colluded to fix purchase prices, harming suppliers and distorting the market.

Claim

Import cartels are a grave threat to fair trade and global economic stability. By colluding to control prices and restrict supply, these cartels exploit consumers, stifle competition, and undermine market integrity. Their manipulative practices drive up costs, hurt developing economies, and erode trust in international commerce. Ignoring the dangers of import cartels allows unchecked greed to dictate markets, making it imperative that governments and regulators take decisive action against this serious problem.

Counter-claim

Import cartels are hardly a pressing issue in today’s global economy. Their impact is minimal compared to far more significant challenges like trade wars, supply chain disruptions, or protectionist policies. Most countries have robust regulations to prevent anti-competitive behavior, making import cartels largely irrelevant. Focusing on them distracts from real economic threats. Frankly, worrying about import cartels is a waste of time and resources in the current international trade landscape.