Canadian COMPETITION LAW

November 14, 2012

When companies think about competition law compliance, the focus is often on senior management and board compliance – that is, ensuring that the board, and a firm’s directors and officers, have a clear understanding of competition law rules.  That is not to say that it is not well known that managers, and in particular a company’s sales force, are often at the center of competition/antitrust issues.  Practically, however, companies often approach compliance from the top down with an expectation that senior management will disseminate the compliance message down through an organization. Sometimes that is the case.  In more cases, however, it seems that it is not – as is evidenced by the Competition Bureau’s perennial complaint that many companies have compliance programs, but fail to effectively implement them.

In this regard, a recent U.K. paper caught my eye on the role of marketing managers in global cartels entitled “The Role of Sales and Marketing Managers Within International Cartels” (J.K. Ashton & A.D. Pressey).

This study looked at 56 major international cartels investigated by the European Union with findings that include the fact that marketing and sales managers have been involved in a substantial percentage of cartels (42.9%), are seldom the most senior managers, tended to involve global cartels (in manufacturing more than distribution industries) and involved information exchanges in the context of predominantly market allocation and price-fixing arrangements.

Interestingly, this study also looks at some of the strategies cartels have used to avoid detection (including minimizing meetings, punishing “cheating” and more levels of organizational hierarchy – i.e., buffers between marketing personnel and senior management), marketing managers’ involvement in trade associations and statistics of U.S. incarceration of foreign nationals and the reliance of whistle blowers in investigations.

Abstract:

“Although the study of international cartels has a considerable lineage our understanding of their organization, operation and management remains limited. This study attends to this omission through examining the role of marketing and sales managers within international cartels using a content analysis of 56 major international price-fixing cartels over two decades (1990-2009). It is reported that marketing and sales managers are demonstrably involved in many international cartels (42.9% of all cartel cases), albeit often accompanied by more senior managers from other firm functions. Marketing and sales managers appear most frequently within worldwide and manufacturing industry cartels and where market allocation and customer-sharing practices occur. In light of these findings it is important to reassess both managerial attitudes towards inter-firm collaborations and enhance the position of antitrust concerns within business school syllabi.”

For a copy of the paper see: Who Manages Cartels? The Role of Sales and Marketing Managers within International Cartels.

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