Antitrust penalties and the implications of empirical evidence on cartel overcharges

Yannis Katsoulacos, David Tregear Ulph

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    29 Citations (Scopus)
    6 Downloads (Pure)

    Abstract

    In this paper we provide a number of extensions to the theory of antitrust fines and we use these, with existing and new datasets, to contribute to a better understanding of the current fining policies of Competition Authorities. In particular, we extend the theory linking cartel overcharges to optimal fines by introducing a number of additional considerations that authorities should take into account in setting fines and that are ignored by the existing literature. We then use existing empirical evidence on cartels and a new dataset relating to Abuse of Dominance cases to show that existing levels of fines are within the range supported by calculations of optimal fines. We then examine the reverse issue of how the toughness of the antitrust regime affects the level of cartel overcharges. We show that the effects are highly ambiguous, thus questioning some of the recent empirical findings on this issue, and the potential benefits of raising penalties.
    Original languageEnglish
    Pages (from-to)F558-F581
    Number of pages30
    JournalThe Economic Journal
    Volume123
    Issue number572
    Early online date31 Jul 2013
    DOIs
    Publication statusPublished - Nov 2013

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