The Wolfe must die in his own skin: A case for custodial sentences against individuals in cartel cases in the EU (original) (raw)
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Title: Criminalization of Cartel Law offenses_ Complete Version
For the past thirty years, Policy makers have been thinking about how to prevent or deter the creation of cartels. The Monopolkommission also shows the high damage level that can result from hardcore cartels such as the disruption of competition, welfare, innovation and efficiency. A debate has dominated on whether cartel offences are serious enough to deserve criminal sanctions or if in fact the traditional administration fines and penalties are an effective enough deterrent to the abuse of dominance positions by cartels. Some scholars and policy makers regard the criminalization of cartel offenses as the most effective deterrent that attempts to minimize cartel offenses. Others however, have stressed that the criminalization of cartels as well and any criminalization of collective goods, must consider some key principles found in the realm of criminal law. These include human rights, publicity, high standards of proof, Jury ability to prosecute and many more, all of which appear to be problematic in the context of cartels. Scholars also pointed out that the criminalization approach causes fewer incentives to leniency programs as well as to whistle blowing. The criminalization approach has been used in the European Continental Law because Common Law countries are in general much more pragmatic due to their legal system and their reliance on antitrust law when they apply penalties to cartels. Many countries like Germany however have had talks of criminalization since the 1970-80s, but remain to fail to apply them as these criminalization principles have not found their place in the constitution in addition to also not receiving any EU harmonization. This essay therefore seeks to render on some of the main arguments for and against the criminalization of cartels and further analyze the effectiveness and importance of criminalization. It will also touch on two case studies that is the UK and Germany to closely scrutinize the application of criminalization. In addition, it will also address the question on whether or not criminalization of cartels is necessary or if it even works based on the debate around which theories are appropriate in context with cartel behavior. This essay will also illustrate the types of undertakings and offenses that are criminal sanction worthy such as horizontal price fixing, quantity and territorial cartels. Lastly, this essay will provide the preconditions of which criminalization is more effective and also shows the different disadvantages and advantages to the criminalization of cartels. This essay will however not address the treatment for criminal liability of corporations and its diverse justifications as this is a subject that exceeds the scope of the present work to date.
Does Crime Pay? Cartel Penalties and Profits
University of Baltimore School of Law Legal Studies Research Paper Series, 2019
This article seeks to answer a fundamental antitrust question: does crime pay? Do the current overall levels of U.S. cartel sanctions adequately discourage firms from engaging in illegal collusion? Seven years ago our research showed that the unfortunate answer was clearly that, yes, criminal collusion usually is profitable! The expected costs (in terms of criminal fines and prison time, civil damages, etc.) was significantly less than expected gains to the price fixers. Sadly, the most recent data re-affirm this conclusion. The great majority of companies participating in illegal cartels make a profit even after they pay all the penalties. The current level of sanctions is only 9 to 21 percent of optimality, so it follows that current overall sanction levels should be quintupled. To move modestly in this direction, we propose five specific recommendations. Only the first and possibly the last would require new legislation. First, legislation should add prejudgment interest to both ...
[2022] 2 Antitrust Chronicle 37
Few would deny that the European Commission has an impressive track record with respect to anti-cartel enforcement. At present, however, a lacuna exists with respect to its enforcement powers: it cannot to impose fines on natural persons who are responsible for their companies’ cartel activity. This article argues that, in order to achieve the deterrence of cartel activity, the Commission should be invested with the power to impose individual administrative sanctions for violations of the EU-level cartel prohibition. Although such sanctions have a drawback in terms of their vulnerability to indemnification, the stigmatization policy currently pursued by the Commission with respect to cartel activity provides considerable scope to prevent the issue of indemnification from undermining the potential deterrent effect of individual administrative sanctions.
From Economic Recession to Legal Opportunity: The Case for Cartel Criminalisation in Europe
In the aftermath of the global financial meltdown and ensuing EU crisis, the European Union still tries to agree on the causes and fine-tune its regulatory responses. Among the policy tools employed, once unimagined but now the new mainstream, have been high-powered EU state-aid laws, bank bail-in rules and aggressive intervention away from market fundamentals. Yet the crucial question remains looming upon EU policymakers: can the next crisis be prevented? Perhaps an affirmative answer partly lies with enhancing individual liability that goes beyond macro and reactive approaches and promotes deterrence of the actual wrongdoers. After all, it is people behind financial and private organisations making the actual decisions that impact our lives. In the area of EU competition law, the time is ripe to seriously think about criminalising cartels. Despite details of implementation – EU harmonisation or decentralised enforcement, the price of another missed opportunity is too high and the challenges posed by the EU supranational structure can no longer serve as an excuse. More importantly, counter to claims that such a move is not in line with the European tradition, there is ample evidence that several Member States criminalise hard-core anticompetitive behaviour in their national laws, and the EU itself is moving to that direction in other areas (e.g. criminal sanctions for market abuse offences). In the age of corporate elites, managerial capitalism, financial and industrial globalisation the most effective way to hold accountable those at the top of the ladder is by raising the threat of criminal liability. In this way we make sure that their incentives are closely aligned with those of society as a whole. In the process we also address major problems such as agency costs, moral hazard and reinforce the effectiveness of existing leniency programmes aiming to undermine cartel stability. What Europe mostly needs is more competition and to that goal we must make market players realise that they cannot rig the rules, as they shall have “skin in the game”. By having individuals bear at least some of the consequences of their actions, not only do we foster competition on the merits and help restore public confidence in markets but we also relieve companies and their parents from exorbitant monetary sanctions which have proved ineffectual and counterproductive and hence set the path for the natural selection of value creating firms in a healthy business environment. Criminalising hard-core cartels is the right thing to do and is also good economic policy that sets the tone for more thriving EU business and more law-abiding corporate employees. No question many challenges lie ahead and one needs to proceeds with great care in designing and implementing criminal law policy, yet the direction is clear. This essay attempts to answer three questions: i) why illegal cartels persist given the existing liability regime in Europe; ii) why criminal sanctions against hard-core cartelists are a necessary supplement to the antitrust enforcement toolbox; iii) why criminal sanctions are desirable from a normative perspective. Accordingly, the analysis proceeds as follows. Part II sheds light on two prominent but underappreciated problems in the intersection of EU antitrust law and corporate governance that underlie the failures and inadequacy of the existing liability regime. Part III analyses the advantages of moving towards a mixed regime that combines corporate and individual criminal liability. Part IV explores the normative, economic and moral, arguments for cartel criminalisation. Part V concludes with some thoughts on lessons to be learnt from the crisis and the way forward for Europe.