Thursday, August 18, 2011
Posted by D. Daniel Sokol
Cento Veljanovski, Case Associates provides new data on Deterrence, Recidivism and European Cartel Fines.
ABSTRACT: Based on a statistical analysis of cartel prosecutions from 1999 to end-2010, the way the European Commission has built up its fines under the 2006 penalty guidelines is assessed. The fines are compared to those imposed by the European Commission under its previous 1998 guidelines. Among the main findings are:
The "gravity" - the starting point for setting a fine - was determined by the cartel members' collective market share; and set between 15% to 25%, with an average of 18% well below the maximum 30% of annual sales. The penalty uplift for recidivism was well below the 100% per prior offence, and never exceeded 100%.
Pre-leniency fines were an average 23% of estimated total sales.
Post-leniency fines were probably restitutionary, and possibly deterred cartels, but this depends on third-party estimates of detection rates and overcharges.
Average post-leniency fines were 84% greater than under the 1998 guidelines, while pre-leniency fines were about the same. Thus the higher headline fines were due to less generous leniency rather than more severe fines under the penalty notice - an average reduction of 18% compared to 36% prior to 2007.
The Commission was more reliant on whistleblowers - full immunity was given in 74% of all cartels prosecuted under the 2006 guidelines compared to 48% under the 1998 guidelines.