Cartel Fine Severity and the European Commission : 2007-2011

This article analyzes the first 22 cartel decisions of the European Commission under its 2006 revised fining Guidelines. I find that the severity of the cartel fines relative to affected sales is about double that of the fines decided under the previous 1998 Guidelines. Severity varies only modestly across companies in the same cartel. A large minority of EC fines now disgorge the monopoly profits accumulated by cartelists. Yet, the new fine guidelines are no more severe than contemporaneous U.S. DOJ criminal fines. Nearly all recent cartel decisions reward one or more participants with full or partial leniency. There is no evidence that leniency discounts have led to larger percentage reductions in cartel-wide fines. Moreover, despite more severe fines, the share of defendants requiring reductions under the Commission’s 10% cap or ability-to-pay considerations has not risen. Contrary to expectations, the size of the percentage discounts for recidivism has gone down under the new guidelines; moreover, severity during the Almunia Commissionership is much lower than his predecessor’s administration. There is evidence that the Commission has been inconsistent in applying recidivism penalties in the manner promised it its 2006 Guidelines. In particular, it has been overly lenient by failing to account for numerous previous hard-core cartel violations in the EU