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US: Academics say cartel fines must quintuple to become effective

By  |  June 13, 2013

Two antitrust academics have conducted a study finding that in order for cartel fines to actually act as a deterrent to cartels, they must rise to levels five times of their current levels. John Connor from Purdue University and Robert Lande of the University of Baltimore conducted the study using gathered statistics and previous studies to determine the threshold at which cartel fines would become effective in preventing collusion; according to Connor and Lande, the optimal fine levels would be at 100 percent of a company’s expected profit, up from the current level of 9 to 21 percent of a company’s profit the entity expects to be penalized with. According to authors, regulators catch about 30 percent of all cartels due to limited government resources. The study is entitled “Cartels as Rational Business Strategy: Crime Pays.”

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