EU ANTITRUST: HOT TOPICS & NEXT STEPS

EU ANTITRUST: HOT TOPICS & NEXT STEPS 2022 Prague, Czechia Where △ π the profit increase reached as a result of cartel and α is a probability of detection and punishment. To give an example, if the cartel profit was 15% and the probability of detection and punishment was 20%, the optimal deterrence fine is 75% of the relevant turnover reached for the duration of the cartel. The optimal compensatory fine would equal to the cartel profit, i.e., 15% – a big difference. Therefore, in the following text, I focus on the deterrence fine which has a potential to play a significant role in the prevention of anticompetitive conduct.

The model uses the following parameters: p is a market price of the relevant goods c is marginal cost m is a margin when m = (p-c)/c k is an overcharge in %, when cartel price p K = p(1 + k)

q is goods quantity demanded for the market price in the relevant period of time ε is an absolute value of demand elasticity when the price is at market level α is a probability of detection of cartel And the optimal deterrence fine can be mathematically expressed as follows:

To be able to determine of the cartelist’s increased profit, it is necessary to estimate the overcharge of goods or services on the relevant market. The overcharge cannot be determined precisely because if we know the cartel price, we do not know what the market price would be and the other way around. Connor (Connor, 2014, pp. 50–52) collected 2044 estimations of such cartel overcharges and found out that the median overcharge is 18.2% for domestic cartels and 25.1% for the international ones. The total median was 23%. These results are similar to what Boyer and Kotchoni (Boyer, Kotchoni, 2014, p. 28) concluded with a median overcharge of 16%. Most interestingly, Laborde (Laborde, 2017, pp. 36–42) analysed judicial decisions in private damages actions (23 judgements) in the EU and found out that overcharges in individual cases differed significantly, from 1% to 59 %. The average overcharge was then 16%. For the purpose of this paper, I estimate the overcharge (here k ) in the range of 5% – 20%. Margin is also considered to be in the range of 5% – 20%. The optimal fine also depends on the demand elasticity, indirectly. The less elastic the market is, the more susceptible to cartels it is. I determine the optimal fine in the non-elastic market e=0, for elasticity of 1 and 2.

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