If price-fixing is so wrong, why is it so pervasive?

Last month, the Department of Justice extracted guilty pleas from a trio of companies on charges that they had conspired to fix prices of LCD screens for a period of five years. LG Display, Sharp, and Chunghwa Picture Tubes were slapped with fines ranging from $65 million to $400 million for jacking up the prices of the displays, which are used in—and affect the retail prices of—everything from TVs to computer monitors to cell phones.

The word cartel tends to evoke images of speedboats and kilos, but the truth is more prosaic—and much more widespread. Cartels are routinely caught tampering with the prices of everything from animal feed to vitamins. One 2007 report that studied international cartels busted between 1990 and 2005 came up with a grand total of 283— which doesn’t even count the ones that managed to escape detection. They’re hard to ferret out because buyers might not even know they're being overcharged. If a cartel has international reach, even a customer with the wherewithal to shop around might not be able to find a better price. Increases usually get passed along until they reach retail shelves, and consumers are the ones who take it on the chin when they open their wallets.

In 1993, the DoJ rolled out an enhanced Corporate Leniency Program, which promises both a literal and figurative get-out-of-jail-free card to participants in price-fixing rings who fess up. Europe soon followed suit with a similar program. In the ensuing years, the industrialized world has ramped up both its prosecution and its punishment of cartels (although the U.S. is currently alone in its practice of incarcerating offenders). Ten years into the program, the DoJ reported that the number of requests for amnesty from cartel members had gone from roughly one a year to anywhere from one to three a month.