EU ANTITRUST: HOT TOPICS & NEXT STEPS

EU ANTITRUST: HOT TOPICS & NEXT STEPS 2022

Prague, Czechia

of such actions since the base fine was derived from the relevant turnover of the competitor rather than the value of the manipulated public procurement. The aim of this paper is to analyse the fines imposed on the participants of the hard core cartels (especially bid rigging) according to the new Guidelines from 2018 and consider if fines today are able to strengthen the deterrent effect and thus prevent competitors from anticompetitive conduct. A comparison with the fines imposed by the European Commission on cartelists will also be included in the paper. 2. Are the fines for price fixing optimal? Methodology. The aim of this paper is to consider if the fines imposed on the cartelists who participated in the most dangerous anticompetitive practices have a deterrent effect. In other words, I am going to consider if the fines are set at such level that they are able to prevent competitors from concluding a cartel contract. To determine the optimal fine in case of standard cartels (not bid rigging), I built on the model developed by Buccirossi a Spagnolo (Buccirossi, Spagnolo, 2007, pp. 1 – 55) according to which the optimal fine is a function of margin, overcharge, demand elasticity, and probability of detection. I will analyse the cartel cases in which the fine was imposed according to the new Sentencing guidelines. In case of bid rigging, for which we have data most often, the calculation of an optimal fine is easier since it is calculated as an overcharge of the value of the public procurement divided by the probability of detection of the cartel. I will analyse the cartel cases (both, the normal ones and bid rigging) in which the fine was imposed according to the new Sentencing guidelines. Subsequently, I compare the optimal fine with the fine which was actually imposed by the Office. 2.1 Theoretical grounds Gary Becker’s economic theory of criminality will help us understand how to prevent competitors from anticompetitive conduct. According to Becker, potential criminals will not commit crimes if they think that it will not pay off (Becker, 1968, pp. 19–20). Of course, he presumes rational criminals who count the potential costs and benefits of crime and commit only such crimes the profits of which will be higher than their costs. Thus, to deter cartelists from anticompetitive conduct, the expected fine together with other potential penalties multiplied by the probability of detection and punishment of cartel members must exceed the expected cartel gain. It is thus necessary to take into account all the potential punishments even the non-financial ones since the non-financial sanctions that concern personal freedom or reputation can have an even stronger deterrent effect (Kahn, 2012, pp. 100 – 102). Both, too little and too much deterrence are harmful, as the second leads to the so called type

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