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Penalising on the Basis of the Severity of the Offence: A Sophisticated Revenue-Based Cartel Penalty

  • Yannis KatsoulacosEmail author
  • Evgenia Motchenkova
  • David Ulph
Article
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Abstract

We propose a new penalty regime for cartels in which the penalty base is the revenue of the cartel but the penalty rate increases in a systematic and transparent way with the cartel overcharge. The proposed regime formalises how revenue can be used as the base while taking into account the severity of the offence. We show that this regime has better welfare properties than the simple revenue-based regime under which the penalty rate is fixed, while having relatively low levels of implementation costs and uncertainty. We conclude that the proposed penalty regime deserves serious consideration by Competition Authorities.

Keywords

Antitrust enforcement Antitrust penalties Antitrust law Cartels 

JEL Classification

L4 antitrust policy K21 antitrust law D43 oligopoly and other forms of market imperfection 

Notes

Acknowledgements

For helpful comments we are grateful to John Davies, Peter Dijkstra, Joe Harrington, Fabienne Ilzkowitz, Frederic Jenny, Tom Ross, Maarten-Pieter Schinkel, and participants at the 12th and 13th Annual CRESSE Conference (July 2017 and 2018 respectively) and at the Symposium on “Cartels: Insights on Fines and Enforcement” that was hosted by the Netherlands Authority for Consumers and Markets in the Hague on May 22nd 2018. We also thank the editor and two referees for their very useful comments and suggestions. We are grateful to acknowledge the financial support received through the Tinbergen Institute, Vrije Universiteit Amsterdam, Short-term Visitor Program.

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Copyright information

© Springer Science+Business Media, LLC, part of Springer Nature 2019

Authors and Affiliations

  • Yannis Katsoulacos
    • 1
    Email author
  • Evgenia Motchenkova
    • 2
  • David Ulph
    • 3
  1. 1.Department of Economic ScienceAthens University of Economics and BusinessAthensGreece
  2. 2.Department of Economics, TILEC and Tinbergen InstituteVrije Universiteit AmsterdamAmsterdamThe Netherlands
  3. 3.School of Economics and FinanceUniversity of St AndrewsSt AndrewsUK

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