The Determination of Optimal Fines in Cartel Cases - The Myth of Underdeterrence

Marie-Laure Allain, Marcel Boyer, Jean-Pierre Ponssard and Rachidi Kotchoni

CIRANO Working Papers from CIRANO

Abstract: The determination of optimal fines to deter the formation or continuation of cartels is a major objective of competition policy. We provide an analysis of static and dynamic frameworks to characterize the restitution and deterrence properties of fines: cartel stability depends on their ability to prevent deviation by firms, while the benefit of a deviation depends on the fines to be imposed in case of detection by the antitrust authority. We show that the proper consideration of the dynamics of competition has a major impact on the determination of optimal dissuasive fines: our results suggest that a clear majority of fines imposed by the European Commission in recent years meet the deterrence objective. La détermination d'amendes optimales pour dissuader la formation ou la poursuite des cartels est au cur des politiques de concurrence. Nous définissons un cadre stratégique pour caractériser le caractère restitutif et dissuasif des amendes dans des contextes statique et dynamique : la stabilité d'un cartel dépend de sa capacité à prévenir les déviations dont la profitabilité est fonction des amendes imposées lorsque le cartel est découvert. Nous montrons que la prise en compte appropriée de la dynamique de la concurrence a un impact majeur sur la détermination des amendes dissuasives optimales : nos résultats suggèrent qu'une nette majorité des amendes infligées par la Commission Européenne ces dernières années rencontrent l'objectif de dissuasion.

Keywords: Optimal fines; cartels; Amendes optimales; cartels (search for similar items in EconPapers)
Date: 2011-03-01
New Economics Papers: this item is included in nep-com and nep-reg
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Citations: View citations in EconPapers (23)

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Working Paper: The Determination of Optimal Fines in Cartel Cases The Myth of Underdeterrence (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:cir:cirwor:2011s-34

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