– John Kemp is a Reuters market analyst. The views expressed are his own –
By John Kemp
LONDON, June 30 (Reuters) – “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices”, wrote Adam Smith in his famous “Inquiry into the Nature and Causes of the Wealth of Nations” in 1776.
Perhaps Smith should be resurrected as an adviser to the European Commission, which has just imposed fines totalling 518 million euros on 17 producers of prestressed steel used in the construction industry, who operated a price-fixing cartel for 18 years on the margins of trade conferences.
Steel is just the sort of industry in which cartels are most likely be found (with multiple producers making an undifferentiated commodity product, wielding little pricing power and with a strong incentive to collude in a bid to raise prices and make life more comfortable for everyone).
Like cement manufacturers and the makers of diverse materials from carbonless paper to calcium carbide and glass, steel producers are no strangers to the European Commission’s Competition Directorate. Some of these industries seem to have been under more or less permanent investigation for 30 years.