Cartel Overcharges and the Deterrent Effect of Eu Competition Law

Abstract

Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar.Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW. Estimation results further indicate that bid-rigging cartels obtain higher overcharges than non bid-rigging cartels. In addition, we do not find changes in the overcharge level over time, implying that adjustments in EU competition law during recent decades did not lead to reservation in the price-setting behavior of cartels. Last but not least, a comparison between cartel overcharges and the existing fine level according to the current EU Guidelines shows that collusion has been a lucrative business for most firms from an ex-post perspective. In 67 percent of the cases the gain from price fixing outweighs expected punishments although the calculations are based on maximum values for cartel detection and upper limits of penalty levels. We therefore conclude that further adjustments of the EU Guidelines are indispensable in order to achieve optimal deterrence. Non-technical summary Das Wichtigste in KürzeIn den vergangenen Jahrzehnten hat sich der Fokus europäischer Wettbewerbs- Furthermore, empirical evidence suggests that the currently existing fine level of the EU Guidelines is too low to achieve optimal deterrence.

Determinants of self-reporting under the European corporate leniency program

“…Furthermore, the recent increase in the significance of private enforcement in the EU and the corresponding possibility of harmed customers of former cartelists to sue for damages factually increases the deterrence effect of competition law thereby raising the question whether current (public) fine levels are still sub-optimally low (see, e.g., Connor 2006, Veljanovski 2007or Smuda 2014.…”

A Step Ahead: Competition Policy for Shared Prosperity and Inclusive Growth

“…However, this approach requires significant judgmental input; and, if sufficient case-specific information is not available, Davies recommends using a single number, somewhere between one and six years. Regarding cartel overcharges, the empirical evidence in the academic literature (see Bolotova and Connor 2006;Smuda 2014) suggests that the median cartel overcharge lies between 17 and 30 percent, which makes the 10 percent assumption conservative.…”

The Impact of Cartels on National Economy and Competitiveness

“…According to , Competition Council of the Republic of Lithuania (2013), when the likely duration of the infringement has not been assessed during the investigation, relying on the international practice it is held that absent the intervention, the anti-competitive agreement would have lasted for additional 6 years. Veljanovski (2009) noted that the longest undetected cartel (Organic Peroxides) had survived on the market even for 29 years, Beyer (2010) pointed out that MSG and Nucleotide cartel had subsisted for 30 years, Smuda (2012) indicated 71 years, and -even 98 years.…”