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Are Cartel Fines Optimal? Theory and Evidence from the European Union

Listed author(s):
  • Marie-Laure Allain
  • Marcel Boyer
  • Rachidi Kotchoni
  • Jean-Pierre Ponssard

Deterring the formation or continuation of cartels is a major objective of antitrust policy. We develop a dynamic framework to characterize the compensation and deterrence properties of fines, based on the fact that cartel stability depends on the ability to prevent deviation, which itself depends in part on fines imposed in case of detection and conviction. We show that the proper consideration of cartel dynamics plays a major role in determining optimal deterrent fines. Our results suggest that a majority of fines imposed by the European Commission in recent years meet the deterrence objective. Dissuader la formation ou le maintien des cartels est un objectif important de la politique antitrust. Nous développons un cadre analytique dynamique pour caractériser le niveau de dissuasion des amendes et indemnisation, fondé sur le fait que la stabilité d'un cartel dépend de la capacité à prévenir les déviations, qui elle-même dépend en partie des amendes infligées en cas de détection et de conviction. Nous montrons que la prise en compte appropriée de la dynamique des cartels joue un rôle clé dans la détermination du niveau des amendes optimales. Nos résultats suggèrent que les amendes imposées par la Commission Européenne au cours des dernières années sont dissuasives, du moins en majorité

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File URL: http://www.cirano.qc.ca/files/publications/2013s-24.pdf
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Paper provided by CIRANO in its series CIRANO Working Papers with number 2013s-24.

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Length: 30 pages
Date of creation: 01 Jul 2013
Handle: RePEc:cir:cirwor:2013s-24
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