Determinants of U.S. Antitrust Fines of Corporate Participants of Global Cartels

7th International Industrial Organization Conference, Boston, April 3-5, 2009

11th annual meeting of the American Antitrust Institute, Washington DC, June, 2010

41 Pages Posted: 7 Mar 2013 Last revised: 9 Mar 2013

John M. Connor

Purdue University; American Antitrust Institute (AAI)

Douglas J. Miller

University of Missouri at Columbia - Department of Economics

Date Written: March 6, 2013

Abstract

For criminal violations of the Sherman Act, although guided by federal sentencing guidelines, U.S. Department of Justice has great latitude in recommending corporate cartel fines to the federal courts, and its recommendations are nearly always determinative. In this paper, we analyze the determinants of variation in size of criminal fines imposed by the Antitrust Division of the DOJ on 118 corporate participants of hard-core global cartels. Our behavioral model provides the first direct test of the optimal deterrence theory of antitrust crimes.

Regressions are fitted to a sample of the corporations that participated in international cartels and that were fined between 1996 and March 2010. The predictive power of the optimal-deterrence model is quite good. We find that U.S. corporate cartel fines are strongly directly related to economic injuries from collusion. However, U.S. fines do not conform to the theory’s predictions about the probability of detection and conviction of clandestine cartels. We also find that fines complement other antitrust penalties: the number of months that a corporate defendant’s managers are sentenced to prison and private damages paid.

Keywords: antitrust, Sherman Act, DOJ, Antitrust Division, cartel, collusion, price-fixing, optimal deterrence, fines, penalties

JEL Classification: L41, L44, L65, L11, L13, N60, K21, K14

Suggested Citation

Connor, John M. and Miller, Douglas J., Determinants of U.S. Antitrust Fines of Corporate Participants of Global Cartels (March 6, 2013). 7th International Industrial Organization Conference, Boston, April 3-5, 2009. Available at SSRN: https://ssrn.com/abstract=2229300 or http://dx.doi.org/10.2139/ssrn.2229300

John M. Connor (Contact Author)

Purdue University ( email )

610 Purdue Mall
West Lafayette, IN 47906
United States
+1 317-733-1938 (Phone)

American Antitrust Institute (AAI)

1730 Rhode Island Avenue, NW
Suite 1100
Washington, DC 20036
United States
202-536-3408 (Phone)

HOME PAGE: http://www.antitrustinstitute.com

Douglas J. Miller

University of Missouri at Columbia - Department of Economics ( email )

118 Professional Building
Columbia, MO 65211
United States

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