Cartels and Economic Collusion

Cartels and Economic Collusion

The Persistence of Corporate Conspiracies

Michael A. Utton

Adam Smith warned of the prevalence of corporate conspiracies more than two hundred years ago. Since then, interest in cartels has sometimes intensified (during the Great Depression, for example) and sometimes diminished, but the need for control has always remained on the antitrust agenda. This well-documented book reviews the economic case against corporate collusion, as well as the arguments made for a more permissive attitude.

Chapter 6: Penalties for Antitrust Offences

Michael A. Utton

Subjects: economics and finance, competition policy, industrial economics


I. INTRODUCTION In previous chapters we have referred to the penalties imposed on individuals and companies for infringing the antitrust laws. The growing severity of these penalties over the last two decades, especially in North America and Europe, have raised concerns in some quarters: the fines are too great; the additional burden (in the US) imposed upon delinquent companies having to pay damages are unjust and/or inefficient; and the incarceration of executives serves no purpose. Equally there are those who conclude that the punishments are not great enough, given the enormous rewards that successful collusion can bring and the inefficiencies they induce. Antitrust law in the US provides for an array of penalties in the case of unlawful collusion. In addition to the fines imposed on companies and their executives, who may also be imprisoned, parties who have been directly harmed by an illegal conspiracy can also sue for damages. In the most notorious cases (such as vitamins and citric acid) all of these weapons may be deployed, leaving the companies concerned with enormous bills to pay and with a depleted cadre of top executives. The questions addressed in this chapter are as follows: what are the optimal penalties that offending companies should have to face if anticartel policy is to achieve the aim of maintaining the advantages of a competitive market economy? Has US policy, for example, got the mixture about right? Should the focus be on the financial punishment of the company and thereby also on the deterrence...

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