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The determination of optimal fines in cartel cases: Theory and practice

Marcel Boyer, Marie-Laure Allain, Jean-Pierre Ponssard, Concurrences, N° 4-2011, n°39887, pp. 32-40
NB: This article is the winner of the academic category, economics section of the 2012 Antitrust Writing Awards. Click here for all winning-awards articles

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Readers vote is closed since March 1st, 2012. Readers’ vote has nominated 2 articles for each of the Awards. This short list has been communicated to the Board, with the articles nominated by the Steering Committees. The Board will decide on the award-winning articles on March 27, at the Awards ceremony to take place in DC. See vote results online here.

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The determination of optimal fines to deter the formation or continuation of cartels is a major objective of competition policy. Several recent publications have suggested that the recent fines imposed by the European Commission are too low to be dissuasive and should therefore be substantially increased. In this paper, we question the economic reasoning underlying the models used in those articles as well as the methodology used in their application. Further, we propose a more adequate dynamic framework to assess the role of fines in deterring cartels and define a dissuasive benchmark level, from which we come to the conclusion that on average recent fines are adequately dissuasive.

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