Penalising on the Basis of the Severity of the Offence: A Sophisticated Revenue-Based Cartel Penalty

Yannis Katsoulacos*, Evgenia Motchenkova, David Ulph

*Corresponding author for this work

Research output: Contribution to JournalArticleAcademicpeer-review

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Abstract

We propose a new penalty regime for cartels in which the penalty base is the revenue of the cartel but the penalty rate increases in a systematic and transparent way with the cartel overcharge. The proposed regime formalises how revenue can be used as the base while taking into account the severity of the offence. We show that this regime has better welfare properties than the simple revenue-based regime under which the penalty rate is fixed, while having relatively low levels of implementation costs and uncertainty. We conclude that the proposed penalty regime deserves serious consideration by Competition Authorities.

Original languageEnglish
Pages (from-to)627-646
Number of pages20
JournalReview of Industrial Organization
Volume57
Issue number3
Early online date6 Nov 2019
DOIs
Publication statusPublished - Nov 2020

Funding

For helpful comments we are grateful to John Davies, Peter Dijkstra, Joe Harrington, Fabienne Ilzkowitz, Frederic Jenny, Tom Ross, Maarten-Pieter Schinkel, and participants at the 12th and 13th Annual CRESSE Conference (July 2017 and 2018 respectively) and at the Symposium on “Cartels: Insights on Fines and Enforcement” that was hosted by the Netherlands Authority for Consumers and Markets in the Hague on May 22nd 2018. We also thank the editor and two referees for their very useful comments and suggestions. We are grateful to acknowledge the financial support received through the Tinbergen Institute, Vrije Universiteit Amsterdam, Short-term Visitor Program.

FundersFunder number
Netherlands Authority for Consumers and Markets in the Hague on May
Vrije Universiteit Amsterdam

    Keywords

    • Antitrust enforcement
    • Antitrust law
    • Antitrust penalties
    • Cartels

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