The Determination of Optimal Fines in Cartel Cases: Theory and Practice

Concurrences, No. 4, pp. 32-40, 2011

10 Pages Posted: 28 Dec 2011  

Marie-Laure Allain

Ecole Polytechnique, Paris - Department of Economic Sciences

Marcel Boyer

CIRANO, Université de Monréal

Jean Pierre Ponssard

Ecole Polytechnique, Paris - Laboratoire d'Econometrie

Date Written: December 2011

Abstract

The determination of optimal fines to deter the formation or continuation of cartels is a major objective of competition policy. Several recent publications have suggested that the recent fines imposed by the European Commission are too low to be dissuasive and should therefore be substantially increased. In this paper, we question the economic reasoning underlying the models used in those articles as well as the methodology used in their application. Further, we propose a more adequate dynamic framework to assess the role of fines in deterring cartels and define a dissuasive benchmark level, from which we come to the conclusion that on average recent fines are adequately dissuasive.

Keywords: European Commission, Competition Policy, Cartels, Fines, Deterrence, Determination of optimal fines

Suggested Citation

Allain, Marie-Laure and Boyer, Marcel and Ponssard, Jean Pierre, The Determination of Optimal Fines in Cartel Cases: Theory and Practice (December 2011). Concurrences, No. 4, pp. 32-40, 2011. Available at SSRN: https://ssrn.com/abstract=1977513

Marie-Laure Allain (Contact Author)

Ecole Polytechnique, Paris - Department of Economic Sciences ( email )

Palaiseau, 91128
France

Marcel Boyer

CIRANO, Université de Monréal ( email )

1400-1130 Sharbrooke St. West
Montreal, Quebec H3A 2M8
Canada
514 985-4000 (Phone)
514-985-4039 (Fax)

HOME PAGE: http://www.cirano.qc.ca/~boyerm

Jean Pierre Ponssard

Ecole Polytechnique, Paris - Laboratoire d'Econometrie ( email )

1 rue Descartes
Paris, 75005
France

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