Developing More Vigorous Anti-cartel Enforcement by Promoting Deterrence

In spite of the many successes in the fight against cartels, enforcement is likely to be suboptimal because competition authorities systematically underdeter cartel formation. The reason is simple: convicted cartels are observed, deterred cartels are not. Consequently, many decisions by a competition authority will be driven by a desire to convict cartels – as that is an observable measure upon which to assess performance – which will be to the neglect of deterring cartels. Underdeterrence manifests itself most heavily through underprosecution (some types of collusion cases are not pursued) and underpenalization (penalties are not set to deter future collusion). Some proposed policy changes are offered for enhancing deterrence.

By Joseph E. Harrington, Jr.^*

“No modern development in antitrust law is more striking than the global acceptance of a norm that condemns cartels as the market’s most dangerous competitive vice [but] is modern cartel enforcement attaining its deterrence goals?” William Kovacic (OECD Conference, October 2013), former Chair of the U.S. Federal Trade Commission.

I. INTRODUCTION

The President of Bumble Bee Foods is sentenced to 40 months in prison and StarKist is levied a $100 million fine by the U.S. Department of Justice for agreeing to reduce the size of a can of tuna and raise prices. Six major truck manufacturers are fined approximately $4 billion dollars by the European Commission for privately meeting to exchange and a