Article by John M. Connor and Robert H. Lande
This Article examines whether the current penalties in the United States Sentencing Guidelines are set at the appropriate levels to deter cartels optimally. The authors analyze two data sets to determine how high on average cartels raise prices. The first consists of every published scholarly economic study of the effects of cartels on prices in individual cases. The second consists of every final verdict in a U.S. antitrust case in which a neutral finder of fact reported collusive overcharges. They report average overcharges of 49% and 31% for the two data sets, and median overcharges of 25% and 22%. They also report separate results for domestic cartels, international cartels, more recent cartels, and bid-rigging. The authors conclude that the current Sentencing Commission presumption that cartels overcharge on average by 10% is much too low. If this finding is correct, the principles of optimal deterrence imply that the current levels of cartel penalties should be increased significantly.
About the Author
John M. Connor. Professor of Industrial Economics, Purdue University. Advisor, American Antitrust Institute.
Robert H. Lande. Venable Professor of Law, University of Baltimore School of Law. Director, American Antitrust Institute.
Citation
80 Tul. L. Rev. 513 (2005)