PUBLIC AND PRIVATE ANTITRUST ENFORCEMENT FOR CARTELS: SHOULD THERE BE A COMMON APPROACH TO SANCTIONING BASED ON THE OVERCHARGE RATE?

Katsoulacos, Yannis; Motchenkova, Evgenia; Ulph, David

doi:10.1590/198055272321

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Revista de Economia Contemporânea

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Articles • Rev. econ. contemp. 23 (02) • 2019 • https://doi.org/10.1590/198055272321 copy

PUBLIC AND PRIVATE ANTITRUST ENFORCEMENT FOR CARTELS: SHOULD THERE BE A COMMON APPROACH TO SANCTIONING BASED ON THE OVERCHARGE RATE?

APLICAÇÃO DA LEGISLAÇÃO ANTIMONOPÓLIO PÚBLICA E PRIVADA AOS CARTÉIS: DEVE HAVER UMA ABORDAGEM COMUM PARA SANCIONAR COM BASE NA TAXA DE SOBRETAXAS?

Authorship SCIMAGO INSTITUTIONS RANKINGS

ABSTRACT

We review recent theoretical literature pointing to the ineffectiveness, in terms of welfare impact, of currently applied sanctioning regimes for cartels by Competition Authorities (CAs). We then provide a comparison of the regimes taking also into account criteria related to ease of implementation and transparency. We argue the case for switching to a penalty regime, in which the penalty base continues to be the currently dominant penalty base of cartel revenue but in which, in contrast to current practice, the penalty rate is based on the rate commonly estimated in order to calculate damages in private damage claims, that is, the overcharge rate.

KEYWORDS:
antitrust penalties; antitrust enforcement; antitrust law; cartels

Penalty (equation) Information Required	Revenue-based (3)	Sophisticated revenue-based (5)	Over charge-based (4)	Illegal gains-based (2)	Damages-based (1)	Simplified damages- and illegal gains-based (6’) and (2’)
Cartel revenue $p^{C} Q^{C} = R^{C} (O; L)$	X	X		X	X	X
Cartel volume of sales, $Q^{C} (O; L)$				X (for $Δ Q$ )	X (for L)
Counterfactual price and, hence, Overcharge $θ = (p^{C} - p^{B}) / p^{B} (U; H)$		X	X	X	X	X
Counterfactual volume of sales $Q^{B} (U; H)$			X	X (for $Δ Q$ )	X (for L)
Cost Information $(c) (U; H)$				X (for m)
Information about Demand Structure $(U; H)$			X	X	X

Assessment criterion Penalty Regime	Ease of Implementation	Transparency/ Certainty	Welfare
Damages-based, $F_{D}$	Low	Low	Strong
Illegal gains-based, $F_{G}$	Low	Low	Moderate
Overcharge-based, $F_{O}$	Low	Low	Strong
Simple revenue-based, $F_{R}$	High	High	Poor
Sophisticated revenue-based, $F_{S R}$	Moderate	Moderate	Strong
Simplified damages - based, ${\tilde{F}}_{D}$	Moderate	Moderate	Poor
Simplified illegal gains - based, ${\tilde{F}}_{G}$	Moderate	Moderate	Poor

Instituto de Economia da Universidade Federal do Rio de Janeiro Avenida Pasteur, 250 sala 114, Palácio Universitário, Instituto de Economia, 22290-240 Rio de Janeiro - RJ Brasil, Tel.: 55 21 3938-5242 - Rio de Janeiro - RJ - Brazil
E-mail: rec@ie.ufrj.br

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[1] Corresponding Author:
Yannis Katsoulacos E-mail address: yanniskatsoulacos@gmail.com