I have really enjoyed publishing this blog. One of the downsides is the embarrassment of an occasional typo, a problem with margins or other technical issues, or like yesterday, when I forgot to include a headline. But, the headline above is not a typo. Banks have been found not to have colluded.
In India, the Competition Commission of India (CCI) dismissed allegations that banks had colluded had to control and determine prices in the gold loan business (here). It is welcome to see the reasoning of the CCI: “It may be observed that parallel behaviour needs to be substantiated with the additional evidence or the plus factors to bring it into the ambit of prohibited anti-competitive agreements.” Of course, what does constitute an agreement is an elusive concept debated by plaintiffs and defendants in the United States on a regular basis. See, A Recap of 2104 Sherman Act Twombly Decisions. But, it is heartening to see the CCI starting with the baseline that mere parallel conduct is not sufficient to establish an agreement. A copy of the CCI order can be found here.
India is becoming an important player in the international cartel world. In the first three-quarters of 2014, the CCI had imposed penalties on 169 entities amounting to more than Rs 2,675 crore (here). ($425 million US by my inexpert conversion of rupees to US dollars at current rate.).
Thanks for reading.
Dear Mr. Connolly:
Thanks for alerting your readership to the important issue of globalization of antitrust enforcement. In my own published work on cartel fines, i have presented time series data on the increasing share of such fines from the newer antitrust authorities in the past 5 to 10 years.
I am a bit more practiced than you perhaps in translating foreign fines into dollars. You will be happy to note that your conversion came out quite close to my own rough calculation.
INR2.675 crore is 26.750 billion Rupees in American English. The INR average interbank exchange rate from 1/1/2014 to 10/31/2014 was 0.0163 USD (according to Oanda). The resulting product is USD436 million (merely 2.6% higher than your figure).
My calculation may be off because the best method is to convert each fine decision to dollars on the day of the decision (or slightly thereafter). Obviously this is much more work.
Thanks John I am surprised I was close. I have been to India twice and rickshaw drivers seem to delight in explaining to me how to convert my dollars to rupees. Their smiles have indicated to me I may not have been calculating correctly.
It is notable that the CCI would say definitively that banks have NOT colluded, rather than that they found no evidence of collusion. In the sense that it is difficult to prove a negative.
Thanks for your comment Geoff. It made me realize that I overstated the CCI findings in my headline. What the CCI found was the “There is nothing on record to even prima facie persuade the Commission that the alleged agreement has been arrived at by the Opposite Parties in concert.”