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Chile: Collusion in drugstore prices?

By  |  May 5, 2015

Chile’s economic overseer, the FNE, was presented this week with expert testimony from Yale economist James Levinsohn, during ongoing proceedings into determining whether three major Drug store chains entered into illegal agreements to raise the price of their products.

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    The FNE has accused 10 executives from the Salcobrand, Cruz Verde and Farmacias Ahumada chains of having established this agreement. The FNE asserts that Salcobrand executives would have led the rise in prices in coordination with their rivals, offering to take the first step in raising its own prices in order for their competitors to emulate them in predetermined intervals.

    The Yale economist, who was called as a witness for the Defense, agreed in theory with the FNE’s interpretation that there doesn’t need to be any written agreement to coordinate such a price-fixing scheme, and therefore a written document is not needed for such actions to represent an ‘implicit’ collusion. According to the FNE, such unwritten coordination would have been facilitated by several Laboratories, who would act as messengers between the drugstore chains.

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