Communication in Cartelized Industries

In this article we first survey both the European Commission’s legal standard and economic theory on communication in industries in which a cartel is operating. We notice a strong tension between the per se illegal nature of communication on price and price fixing, considered to be proof of the existence of a cartel, on the one hand, and the economic foundations of communication on the other hand. Next, we focus on industries that may only host a partial cartel and reconcile the legal and economic views to some extent. Finally, we explain by intuitive analysis of an economic model that the European Commission’s legal standard recently moved even further away from current economic understanding in its Bananas decision.