The United States Department of Justice Antitrust Division's Cartel Enforcement: Appraisal and Proposals
93 Pages Posted: 8 May 2008 Last revised: 22 May 2009
Date Written: June 10, 2008
This paper evaluates the effectiveness of the efforts of the Antitrust Division of the U.S. Department of Justice to detect, indict, and deter horizontal collusion during 1990-2007 and offers policy suggestions likely to improve that enforcement. Division leaders emphasize that collusion is the agency's number-one priority. Paradoxically, there is evidence that the number, size, and injuriousness of discovered cartels is increasing. This is particularly true for international cartels. The number of cartel investigations has not risen appreciably. Moreover, the number of criminal Section 1 cases filed annually fell. From 1995-99 to 2004-06 cartel cases filed fell by 49%. The number of corporations charged annually dropped continuously throughout 1995 2007. There now is a significant and growing backlog of criminal investigations and unresolved matters. Although the Division is bringing fewer Section 1 cases, the monetary penalties imposed on convicted corporate price fixers have grown. The total amount of cartel fines imposed is $4.2 billion. While an impressive amount, damages recouped by U.S. private plaintiffs are roughly four times as large. Division policy statements place great weight on the deterrence value of predictably high prison sentences for convicted cartel managers. Not only the frequency but also the severity of prison sentences has increased. These trends are positive in terms of cartel deterrence. Higher cartel penalties would better serve cartel deterrence. The Division can take several stepsthat do not require new legislation. They include: substituting the global affected sales of cartels members in place of U.S. sales when computing the base fine, applying the principle of joint and several liability to maximum fines, using the middle or upper end of the Guidelines' range as the standard starting demand in plea negotiations, applying strong culpability multipliers to recidivists, and requiring cartel fines to include pre-plea interest. Other improvements would require changes in the U.S. Sentencing Guidelines (USSGs). For example, the 10% overcharge assumption should be raised to at least 20 or 30%, with the latter applying to international conspiracies. To effectively deter cartels, a substantial increase in Division positions and budget is amply justified.
Keywords: antitrust, cartel, price fixing, deterrence, penalties, fines, discounts, Department of Justice
JEL Classification: K21, K14, L41, L44, L65, L11, L13, N60
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