IMO price fixing is a lot more common than most people assume. The normal textbook economics say that in a pure commodity market like eggs, the average producer should make near zero profit. There are a few ways to make a profit in these industries, such as economies of scale or innovative use of byproducts, but it is very tough.

On the other hand, price fixing is relatively easy, and as long as the players don’t get too greedy and don’t leave a paper trail, they’re unlikely to be caught. The only way it usually happens is if there is a whistleblower.

The ADM lysine case years ago also threw a lot of cold water on whistleblowers when the whistleblower ended up getting more jail time than any of the other conspirators.

Anyhow, the fact you even see any successful prosecutions given how hard it is prove, and the paradoxical fact that in some commodity industries, you actually do see decent profit margins tells me that this sort of thing is actually probably very common.

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Filligree 4 hours ago | parent | next [-]

Google tells me the whistleblower in that case was jailed for massive embezzlement, not for whistleblowing. Do you have reason to think this is false?

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michaelchisari 4 hours ago | parent | next [-]

Are we talking about Mark Whitacre? He was a piece of work. His whistleblowing was legitimate but the massive embezzlement was also legitimate.

The Soderbergh film The Informant! starring Matt Damen is about that story.

https://www.youtube.com/watch?v=U-in7L8AmU4

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cameldrv 4 hours ago | parent [-]

Yeah that movie is almost completely unwatchable though. They took this conspiracy story and tried to make it into a zany slapstick comedy. I have no idea what Soderbergh was thinking.

	▲	michaelchisari 18 minutes ago \| parent [-]
		I enjoyed it.

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cameldrv 4 hours ago | parent | prev [-]

Right it was in fact the embezzlement that originally got him to become a whistleblower. The FBI was investigating the embezzlement, and he told them that he could give them a bigger fish. Anyhow he wore a wire in several price fixing meetings and was generally extremely cooperative with the FBI. I think he embezzled on the order of $10 million from ADM, but the Lysine conspiracy was on the order of a $200 million overcharge to Lysine customers.

Now Whittacre was crazy and unstable, but what the DOJ did by giving him a bigger sentence for the embezzlement than the heads of ADM that he made the case against IMO sent a message that cooperating with the government on a price fixing case is not going to help you.

What the story really says IMO also is that one of the only ways for the government to actually get enough evidence to prosecute these cases is to have someone who is part of the conspiracy that has committed some other crime, and the feds can flip them. That's not going to happen too often.

Ultimately the government also proved that ADM was also part of a completely separate citric acid price fixing cartel involving different players, but the MO was exactly the same mustache twirling crazy conspiracy theorist's dream of the players sitting down together in a hotel conference room dividing up the market.

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anonymous908213 4 hours ago | parent | prev [-]

> The ADM lysine case years ago also threw a lot of cold water on whistleblowers when the whistleblower ended up getting more jail time than any of the other conspirators.

"Whitacre was sentenced to nine years in federal prison for embezzling $9.5 million from ADM at the same time he was assisting the federal price-fixing investigation."

Not that I trust Wikipedia, but I think if the common narrative is wrong it'd probably behoove you to pre-empt it because anyone who looks it up is going to come away feeling deceived by your statement as written.