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

See all articles by Ioannis Lianos

Ioannis Lianos

University College London - Faculty of Laws; BRICS Competition Law & Policy Centre - HSE National Research University

Frederic Jenny

ESSEC Business School

Florian Wagner-von Papp

Helmut Schmidt University / University of the Armed Forces Hamburg

Evgenia Motchenkova

VU University Amsterdam - Department of Economics; TILEC

Eric David

KRAMER LEVIN NAFTALIS & FRANKEL

Date Written: May 1, 2014

Abstract

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

Lianos, Ioannis and Jenny, Frederic and Wagner-von Papp, Florian and Motchenkova, Evgenia and David, Eric, An Optimal and Just Financial Penalties System for Infringements of Competition Law: A Comparative Analysis (May 1, 2014). CLES Research Paper No. 3/2014, Available at SSRN: https://ssrn.com/abstract=2542991

Ioannis Lianos (Contact Author)

University College London - Faculty of Laws ( email )

London
United Kingdom

BRICS Competition Law & Policy Centre - HSE National Research University ( email )

28/11, Shabolovka ulitsa
Moscow, 109028
Russia

Frederic Jenny

ESSEC Business School ( email )

3 Avenue Bernard Hirsch
CS 50105 CERGY
CERGY, CERGY PONTOISE CEDEX 95021
France

Florian Wagner-von Papp

Helmut Schmidt University / University of the Armed Forces Hamburg ( email )

Holstenhofweg 85
Hamburg, 22008
Germany

Evgenia Motchenkova

VU University Amsterdam - Department of Economics ( email )

De Boelelaan 1105
1081 HV Amsterdam
Netherlands

TILEC ( email )

Warandelaan 2
Tilburg, 5000 LE
Netherlands

Eric David

KRAMER LEVIN NAFTALIS & FRANKEL ( email )

Paris
France

HOME PAGE: http://www.kramerlevin.com/edavid/

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