How Long Do Cartels Last in Developing Countries? An Economic Analysis of the Determinants of Cartel Duration in Brazil

Abstract

This paper analyses the determinants of cartel duration by using a dataset of 120 cases sanctioned by the Brazilian Competition Authority (CADE) between 1999 and 2022, which corresponds to all cartels sanctioned by CADE in Brazil from its inception until December 2022. The research considers the starting and the ending dates of the infringement as indicated in the case files, and it reveals an average duration of four years per cartel. Around 20% of the cartels had a very short duration (less than three months), while the longest cartel durations were around twenty years per cartel (i.e., the cartels in the markets of cement, salt extraction and marine hoses). The research then focuses in exploring the key determinants that may affect the duration of cartels, including the affected economic sector, the number of defendants and the geographic scope (i.e., local, national or international cartel). For this purpose, the research provides a statistics description of the database, which includes more than 2,500 defendants and total fines of around ten billion BRL (two billion Euros). The paper also explores possible correlations between these key determinants and the duration of cartels, by applying tests to measure the intensity of the correlations and its statistical significance, in addition to a regression exercise using ordinary least squares (OLS) and weighted least squares (WLS) to complete the analysis. Last, a cartel survival estimation based on a Kaplan-Meier modelling indicates the probability of a cartel surviving after a given number of years, as done in similar academic work related to other jurisdictions. The paper concludes with a summary of the key findings and suggestions for future work.