The Global Bearing Market For Automotive Bearings

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1. Introduction

In 2014, the global bearing market had a value of 75.91 billion dollars with a Compound Annual Grade Rate (CAGR) of 7.7% from the year of 2014 to 2020. The bearing market is mainly driven by automotive industry, meaning that if there is an increase of demand of vehicles, it will lead to an increase of bearings and steel (material used to manufacture the bearings) (PR Newswire, 2014).

In March 2014, the European Commission found irregularities in the market for automotive bearings. These irregularities consisted of six companies that operated as a cartel for seven years (April 2004-July 2011) in the European Economic Area. Therefore, the European Commission penalized the participant companies by imposing fines of € 953,306,000 in total and also provided an opportunity for reduction when the involved companies agreed to clear up the case with the Commission. The involved companies were: the Europeans SKF and Schaeffler and the Japanese JTEKT, NSK, NFC, and NTN (European Commission, 2014).

This paper presents a description of market structure in which the bearing companies operate in Europe, possible environment that led to collusive behavior, incentives for companies that led them to participate in cartel and resulting welfare from it. Moreover, the paper also presents an assessment of Government intervention with costs and benefits analysis and its effects to all stakeholders. Through this assessment, an argument is carried out on the appropriateness of
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