The Distortive Effects of Antitrust Fines Based on Revenue
Open accessAbstract
In most jurisdictions, antitrust fines are based on affected commerce rather than on collusive profits, and in some others, caps on fines are introduced based on total firm sales rather than on affected commerce. We uncover a number of distortions that these policies generate, propose simple models to characterise their comparative static properties and quantify them with simulations based on market data. We conclude by discussing the obvious need to depart from these distortive rules of thumb that appear to have the potential to substantially reduce social welfare. How competition authorities (CAs) should set fines and how they actually do so in practice is a highly debated issue among antitrust practitioners. In Europe, where fines are often set directly by the CAs, appeal courts have often slashed CAs ’ decisions precisely on the grounds of how they set the fines. An illuminating example is the UK Competition Appeal Tribunal (CAT) decision in 2011 to cut the fines set by the Office of Fair Trading (OFT) for members of the construction recruitment cartel substantially, on the grounds that the ‘wrong ’ measure of affected commerce was used. One reason behind these debates is that not only antitrust regulating CAs but also courts, where in charge, use rules of thumb to set the fines that – although well
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Multinational firms use intricate accounting arrangements to reduce their tax payments, a practice that is spreading in the EU and US.
“as international companies devise complex accounting mechanisms to avoid paying much tax (as becoming more common in the EU and US, Bageri 2013).”
From AI bias: exploring discriminatory algorithmic decision-making models and the application of possible machine-centric solutions adapted from the pharmaceutical industry (2022) · cites this paper as Bageri 2013
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“Moreover, the percentage needs to be calculated on the turnover, rather than profit or the amount of tax paid, as international companies devise complex accounting mechanisms to avoid paying much tax (as becoming more common in the EU and US, Bageri 2013).”
Background
- Authors
- Bageri, V., Katsoulacos, Y., & Spagnolo, G.
- Affiliations
- Athens University of Economics and Business (GR)
- Stockholm School of Economics (SE)
- Venue
- The Economic Journal
- Publisher
- Oxford University Press (OUP)
- Published
- 2013-11-01
- Volume
- 123
- Issue
- 572
- Pages
- F545-F557
- ISSN
- 0013-0133 (ISSN-L)
- 1468-0297
- OpenAlex
- W2171760251
- Cited by
- 69
- References
- 41
- Citations by year
- 2026: 2 · 2025: 1 · 2024: 1 · 2023: 2 · 2022: 23 · 2021: 1 · 2020: 3 · 2019: 4 · 2018: 4 · 2017: 5 · 2016: 3 · 2015: 3 · 2014: 8 · 2013: 8 · 2012: 1
- FWCI
- 17.23
- Type
- journal article
- Language
- en
- Open access
- green
- swopec.hhs.se
- Locations
- The Economic Journal (publishedVersion)
- RePEc: Research Papers in Economics (submittedVersion)
- Cineca Institutional Research Information System (Tor Vergata University) (submittedVersion)
- Econstor (Econstor) (submittedVersion)
- Funders
- Economic and Social Research Council (RES – 062‐23‐2211)
- Swedish Competition Authority
- Topics
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Merger and Competition Analysis
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Law, Economics, and Judicial Systems
- Social Sciences › Business, Management and Accounting › Strategy and Management › Diverse Legal and Medical Studies
- Keywords
- antitrust fines, competition authorities, cartel damages, social welfare (welfare economics), Office of Fair Trading, Competition Appeal Tribunal, comparative statics
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