Should Price Fixers Finally Go to Prison? - Criminalization, Leniency Inflation and Whistleblower Rewards in the EU

Posted: 4 Jun 2018

See all articles by Catarina Moura Pinto Marvão

Catarina Moura Pinto Marvão

Economics Department, University College Dublin; Stockholm School of Economics - Stockholm Institute of Transition Economics (SITE)

Giancarlo Spagnolo

Stockholm School of Economics (SITE); Centre for Economic Policy Research (CEPR); University of Rome 'Tor Vergata'; EIEF

Date Written: May 18, 2018

Abstract

There is a considerable debate on whether the introduction of criminal penalties in the EU, for individuals who engage in cartel activity, can strengthen antitrust enforcement. In this article we examine the recent changes to the antitrust enforcement scenery and the newly available empirical, theoretical and experimental evidence on fines and leniency, since the previous debate on criminalization. We also document a recent phenomenon that we name “leniency inflation” at the EU level. Our empirical analysis of the criminal sanctions imposed in the US suggests that repeat offenders are less likely to receive a prison sentence. In the EU, prison sentences are rare but seem to be on the rise and it appears that the current level of EC sanctions has a modest effect on corporate governance and needs to be strengthened. These results indicate that there is a need to introduce criminalization, in particular for infringements in the financial industry, possibly complemented by a moderate use of more expensive but proactive enforcement tools, such as screens and whistleblower rewards.

Keywords: antitrust, cartels, collusion, corporate criminal liability, deterrence, optimal sanctions, optimal liability, judgement proofness

JEL Classification: C72, C73, D43, D81, H11, K14, K20, K21, K42, L13, L44, L51

Suggested Citation

Marvão, Catarina Moura Pinto and Spagnolo, Giancarlo, Should Price Fixers Finally Go to Prison? - Criminalization, Leniency Inflation and Whistleblower Rewards in the EU (May 18, 2018). Available at SSRN: https://ssrn.com/abstract=3180685

Catarina Moura Pinto Marvão (Contact Author)

Economics Department, University College Dublin ( email )

Belfield, Dublin 4 4
Ireland

Stockholm School of Economics - Stockholm Institute of Transition Economics (SITE) ( email )

P.O. Box 6501
S-113 83 Stockholm, 11383
Sweden

Giancarlo Spagnolo

Stockholm School of Economics (SITE) ( email )

P.O. Box 6501
Stockholm
Sweden

HOME PAGE: http://https://sites.google.com/site/giancarlospagnoloshomepage/

Centre for Economic Policy Research (CEPR)

London
United Kingdom

University of Rome 'Tor Vergata' ( email )

Faculty of Economics - DEI
Via Columbia 2
Rome, RM 00133
Italy

EIEF ( email )

Via Due Macelli, 73
Rome, 00187
Italy

HOME PAGE: http://WWW.EIEF.IT

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