An Optimal and Just Financial Penalties System for Infringements of Competition Law: A Comparative Analysis
CLES Research Paper No. 3/2014
312 Pages Posted: 28 Dec 2014 Last revised: 30 Dec 2014
Date Written: May 1, 2014
The report examines optimal financial penalties from an economic and a comparative perspective. While emphasis is put on deterrence, we also examine some limits to the optimal enforcement theory employed by economists to design effective sanctions, in particular the principle of proportionality and the need for the penalty to be related to the harm caused and the wrong committed, the legal system integrating corrective justice concerns. The report delves into the tension between over-enforcement and under-enforcement and that between a more effects-based approach for setting financial penalties (sanctions) that would rely on economic methodologies and a case-by-case analysis to provide an accurate estimate of the harm caused by the anticompetitive conduct and a more "forms-based" approach that would rely on the use of proxies of percentages of the volume of commerce or the affected sales. The latter reduce the administrative costs of the authorities in designing appropriate sanctions but are less accurate than effects-based approaches. The report examines intermediary approaches put forward by the literature and their possible application to various competition law infringements (e.g. cartels, abuse of a dominant position). The final part of the report proceeds to a detailed comparative analysis of the financial penalties (sanctions) regimes for infringements of competition Law in the European Union, United States, Germany, United Kingdom, France and Chile, taking an empirical and a doctrinal perspective. Specific recommendations for the reform of the financial penalties system in Chile are also provided.
Keywords: fines, competition law, antitrust, financial penalties, cartels, deterrence, optimal enforcement, justice, proportionality, compliance
JEL Classification: K21, L40, L49
Suggested Citation: Suggested Citation