February 18, 2011
Has the European Commission Become More Severe in Punishing Cartles? Effects of the 2006 Guidelines
Posted by D. Daniel Sokol
John Connor (Purdue - Ag Econ) asks Has the European Commission Become More Severe in Punishing Cartles? Effects of the 2006 Guidelines.
ABSTRACT: This paper analyzes the first 13 cartel decisions of the European Commission under its 2006 revised fining guidelines. I find that the severity of the cartel fines is more than five times higher than those figured under the previous 1998 Guidelines. For the first time in antitrust history, I believe we are observing fines that regularly disgorge the monopoly profits accumulated by cartelists. Indeed, three firms’ fines ranged as high as 500% to 650% of affected sales – possible (but rare) examples of supra-deterrence.
Nearly all recent cartel decisions reward one or more participant with full or partial leniency, a much higher share than previously. There is no evidence that leniency discounts have led to larger percentage reductions in cartel-wide fines. Moreover, despite more severe fines, the share of defendants requiring reductions under the Commission’s 10% cap or ability-to-pay considerations has not risen.
The frequency and size of recidivism discounts has gone up markedly under the new guidelines. There is ample evidence that the Commission has been inconsistent in applying recidivism penalties in the manner promised it its 2006 Guidelines. In particular, it has been lenient by failing to account for numerous previous violations.
February 18, 2011 | Permalink
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