Occupant safety systems supplied to the Volkswagen Group and the BMW Group
On 5 March 2019, the European Commission announced that it had imposed fines totaling €368 million on three suppliers of car seatbelts, airbags and steering wheels, for participating in two cartels during 2007-2011. This decision is part of a series of major investigations into cartels in the automotive parts sector: in previous years, the Commission had already fined suppliers of automotive bearings, wire harnesses, flexible foam, parking heaters, alternators and starters and thermal systems. With reference to this case, Commissioner Margrethe Vestager, said:
“This is the second time we fine car safety equipment suppliers for participating in a cartel. Components such as seatbelts and airbags are essential for the safety of the millions of people that use their car to drive to work or take their children to school every day. The three suppliers colluded to increase their profits from the sale of these life-saving components. These cartels ultimately hurt European consumers and adversely impacted the competitiveness of the European automotive sector, which employs around 13 million people in the EU.”
Your writing assignment:
Provide a concise and informative description of this cartel case.
Use your course knowledge about economic efficiency and welfare to explain, why the European Commission seeks to disrupt cartels and prevent their formation. You must provide a graphical analysis accompanied by a verbal explanation of the relevant economic concepts.
This specific Case AT.40481 actually covers two distinct cartels, or ‘infringements’, one targeting the VW Group and the other targeting the BMW Group. Although there is a lot of overlap (e.g. the cartel members are the same in both cases), they are, at least partly, addressed separately in the Commission’s rulings. Discuss whether, from the perspective of economic efficiency and welfare, there are meaningful differences between these two cartels.
There is a wealth of information on the topic of the actions the European Commission takes and has taken against cartels. We expect you to consult at least five academic references additional to those provided below and of which at least three must be academic journal articles. You may consult more. Academic journal articles may include research articles and similar studies produced by research institutes and university economics departments. They do not include newspaper articles.
A good starting point into the topic is:
European Commission (March 2019). Antitrust: Commission fines car safety equipment suppliers €368 million in cartel settlement. Retrieved from
https://ec.europa.eu/commission/presscorner/detail/en/IP_19_1512 (Links to an external site.)
European Commission (March 2019). Nonconfidential version of the decision in CASE AT.40481 – Occupant safety systems (II) supplied to the Volkswagen Group and the BMW Group. Retrieved from https://ec.europa.eu/competition/antitrust/cases/dec_docs/40481/40481_2058_7.pdf
Must contain a clear ‘purpose statement’, a separate outline and satisfactory conclusion; ensure that the organization of your paper follows logically from your purpose statement.
Relevant economic aspects, organized logically and coherently; source material should be reviewed in the discussion of the topic.
Accurate grammar, spellings and punctuation; appropriate style and tone.
Citations & references
A minimum of 5 references of which 3 must be academic papers, in addition to those provided above. Use APA 7 style for all citations and references.
Font: Times New Roman 12
Margins (top, bottom, left, right): 2.54 cm (= 1 inch). This is default on most word processing programmes.
All pages should have page numbers in the header, top right corner. The title page is page 1 (hidden).
Paper size: A4
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