Javier Garcia-Verdugo, Carlos Merino Troncoso and Lorena Gomez Cruz ‘An Economic Assessment of Antitrust Fines in Spain’ (2018) World Competition Law and Economics Review 41(3) 335

This article, available here, tries to quantify the deterrent power of fines imposed by the Spanish competition authority from 2011 to 2015. Despite being authored by senior staff at the Spanish competition authority, the paper concludes that most of the fines imposed by the Spanish competition authority during this period were under deterrent. The argument is structured as follows: Section II sets out how to quantify cartel gains. A deterrent optimal fine can be defined as a fine that deters a company from participating in a cartel. Such an outcome is achieved when there is no expected net gain from participating in the cartel in the first place, i.e. when the expected illicit gain of entering into a cartel is lower than the expected loss from being sanctioned for cartel participation. Therefore, the reference value for an optimal fine should be determined by reference to an estimate of the illicit gain (also known as excess profit) flowing from cartel membership. This illicit…

Douglas Ginsburg and Cecilia (Yixi) Cheng  ‘The Decline in U.S. Criminal Antitrust Cases’ George Mason University Law & Economics Research Paper Series 19-31 (Forthcoming in Liber Amicorum Albert A. Foer (2020) Nicolas Charbit et al. (eds)

Criminal cartel prosecutions are at modern lows in the U.S. The authors of this paper, available here, offer three non-exclusive hypotheses for this decline: (1) increasingly large fines in multiple jurisdictions have lessened the incentive to apply for leniency in any one jurisdiction; (2) technology has caused the substitution of lawful tacit for unlawful express collusion; and (3) competition policy has succeeded in deterring cartel formation – at least among U.S. companies. Copyright: FT While the available data is too limited to reach a definite conclusion, it seems to support the third hypothesis: since 2008, investigations have focused predominantly on foreign companies, while both the number and share of investigated U.S. companies have decreased. This is consistent with the hypothesis that U.S. competition policy has been effective in deterring anti-competitive conduct by US companies. Section II describes the recent downward trend in cartel prosecutions. The number of criminal cases filed annually by the DoJ decreased from 90 in 2011 to 18 in…

William E. Kovacic, Robert C. Marshall and Michael J. Meurer on ‘Serial collusion by multi-product firms’ (2018) Journal of Antitrust Enforcement 6 96

This paper, available here, is long and so, I am afraid, is the review. In short, the authors of this paper take issue with the assumption that each cartel in which a given firm participates is a single instance of conduct that is independent of other cartel conduct by the firm. Evidence of serial collusion by major multi-product firms is readily observable from the public record in a number of sectors, such as chemicals, electronics, car-parts, financial products or graphite. Further, collusion persists in at least three of these industries, with new investigations having recently been opened into collusion in the chemical, auto parts, and financial products markets. The paper provides empirical evidence that many multi-product firms have each participated in several cartels over the past 50 years. It argues that traditional assumptions regarding how cartelists operate, and consequent enforcement strategies, are deficient in many aspects. Reflecting this, the authors make policy recommendations to reign in serial collusion. The article is structured as…

Vivek Ghosal and Daniel Sokol on ‘The Rise and (Potential) Fall of U.S. Cartel Enforcement’

This working paper, which is available here,  is still rough around the edges, but it contains a number of interesting insights, which I thought might be of interest. This essay traces how the institutional setting of U.S. cartel enforcement evolved over the years, and assesses these developments from an optimal deterrence framework. In doing so, the authors also review the outcomes of the various US policy regimes in terms of number of cartels prosecuted, the level of financial penalties imposed per individual and firm, and of jail time for cartel crimes. The authors also offer an analysis of how cartel enforcement has varied with recent US Presidential administrations. Section 3 describes how cartel enforcement has evolved in the US since 1890. Cartel enforcement in US began with the passage of the Sherman Act, which imposed a maximum fine for collusion of USD 5,000, raised to USD 50,000 in 1955. Jail time was not actively pursued until the late 1950s, when…

Daniel Sokol ‘Reinvigorating Criminal Antitrust?’ (2019) William & Mary Law Review 60 1545

A number of non-cartel antitrust infringements remain crimes under US law, even if they are not prosecuted in practice. This article, available here, deals with the implications of recent claims for increased antitrust enforcement for the application of such provisions.  A natural extension of enforcement would be to advocate the use of criminal sanctions for various antitrust violations outside of collusion which are “on the books” but have not been used in over a generation. The article argues that a return to the criminalisation of non-collusion related antitrust abuses is problematic not only as a matter of optimal deterrence, but also unconstitutional as a matter of law. Section one describes how antitrust criminalisation is a form of achieving deterrence. Antitrust enforcement builds on models of optimal deterrence. Under an optimal deterrence antitrust framework, a firm or individual will be deterred where the expected costs of illegal activity, taking into account the probability of detection and magnitude of the penalties, exceed…

Beatrice Stange on ‘Romano Pisciotti v Bundesrepublik Deutschland: Increased Risk of Extradition for EU Citizens after Involvement in US Cartels’ (2019) Journal of European Competition Law & Practice 10(2) 89

This paper, available here , discusses the first deportation of an EU citizen to the US for competition law infringements. It focuses on a recent judgment by the Court of Justice of the European Union on this matter. A first section outlines the factual background of the case. In 2010, a US arrest warrant was issued for Italian businessman Romano Pisciotti on account of his involvement in the marine hoses cartel. In 2013, the German federal police arrested Mr. Pisciotti at Frankfurt Airport during a stopover of his flight from Nigeria to Italy. He was provisionally detained and, a few months later, the German authorities accepted the US request for extradition despite Mr. Pisciotti’s legal appeals, inter alia before the German Federal Constitutional Court. Other extradition requests from the US authorities had so far been unsuccessful, mainly because most international extradition agreements (including the Treaty between Germany and the US) require that the sanctioned conduct must be a crime in…

Chiara Muraca ‘Cultural and Political Forces in the Criminalisation of Cartels: A Case Study on the Chilean Experience’ (2018) World Competition 579

In addition to rising monetary fines against both companies and individuals, over the last ten years more than thirty countries have decided to criminalise cartel activities. At the same time, and despite the growing number of countries opting for a criminal enforcement, the implementation of such measures has been quite deficient outside the US. Many of these countries have encountered procedural and political obstacles to enforcing criminal provisions against anticompetitive conduct, including a lack of support from key players in the enforcement process. Among the main explanations for this state of affairs is a belief that criminalisation of cartels outside the US is often the product of a top-down process led by transnational enforcement interests rather than domestic bottom-up forces. The aim of this article, available here, is to test this explanation by conducting an empirical study of criminalisation efforts in Chile. The study involved interviews with the main stakeholders who took part in the criminalisation process in Chile, such…

Peter Whelan ‘Competition Law and Criminal Justice’ in The Intersections of Antitrust, Galloway (ed.), (Oxford University Press, forthcoming)

As opposed to other types of market conduct (such as, e.g., vertical distribution agreements or the unilateral use of market power), cartels are widely perceived to have few if any redeeming features. In recent years, one can clearly detect a firm commitment from antitrust enforcers around the globe to pursue rigorously the investigation, detection and prosecution of cartel activity. Aligned with this development is a growing tendency in a wide variety of jurisdictions to hold individuals accountable for the creation and implementation of cartels, including through use of criminal law. Unfortunately, the employment of criminal cartel sanctions is not without its problems. This paper, available here, seeks to evaluate some inherent problems associated with the use of criminal sanctions for cartel conduct to deter anticompetitive behaviour. It is structured as follows: Section B outlines the deterrence-based justification for criminal cartel sanctions. The primary rationale for the criminal cartel sanctions is economic deterrence. Unlike retribution, deterrence does not concern itself with…

Andreas Stephan ‘An empirical evaluation of the normative justifications for cartel criminalisation’ (2017) Legal Studies 37(4) 621

A growing number of jurisdictions treat ‘hard-core’ cartel conduct as crime, in the belief that the threat of incarceration is necessary for deterrence. For many years, the US was the only active criminal cartel enforcement regime in the world. Cartels were first prohibited under the US Sherman Act 1890 as misdemeanours, and became a felony in 1974. The US Department of Justice regularly secures convictions of firms and individuals – many of whom agree to serve custodial sentences under negotiated plea agreements – from around the world. In the past 20 years, there has been an international movement towards the US model. Around 25 jurisdictions have criminalised ‘hard-core’ cartel conduct, including the UK, France, Ireland and Australia – with many more having adopted criminal offences that relate only to bid-rigging in public procurement. Most of these jurisdictions have chosen to retain their civil enforcement powers in parallel, so as to use criminal enforcement selectively. However, there is still disagreement over…

John Connor and Dan Werner  ‘Variation in Bid-Rigging Cartels’ Overcharges: An Exploratory Study’

This working paper  is available here. A summary version, called ‘New Research on the Effectiveness of Bidding Rings: Implications for Competition Policies’ (2019) CPI Antitrust Chronicle April,  can be found here but I have to say I found this shorter version to be slightly confusing, so I would advise you to read the longer paper. There seems to be a consensus that bid rigging is more harmful and deserving of higher penalties than ordinary price fixing violations. Reflecting this, there is empirical evidence that antitrust penalties are more severe for rings than for classic price-fixing cartels. A number of jurisdictions, such as Germany and Italy, impose criminal liability only for bid rigging infringements, but not for other types of cartel. Multilateral organisations, such as the OECD and the International Competition Network, have given special attention to the problems of enforcement against bid rigging. Yet, this antipathy toward bid rigging relative to the more common form of collusive conduct (classic price…