An empirical inquiry into cartel overcharges and cartel fines including an assessment of the EU’s guidelines on cartel fines and damages

Key Points

Cartel overcharges are significantly influenced by market concentration and duration, showing a complex causal relationship.
The difference-in-differences methodology was utilized to analyze cartel behavior with a focus on regulatory impact.
Increased private damage payments were associated with the 2014 cartel damages directive, indicating legal effectiveness.
Findings highlight the potential for EU policy changes to reduce cartel overcharges and enhance enforcement mechanisms.

Abstract

Abstract Utilizing Connor’s International Cartel Database and employing difference-in-differences methodology, we find that market concentration, the number of buyers and cartel duration have significant impacts on cartel overcharges. We also find that the European Commission’s 2006 guidelines on the method of setting fines for cartel infringements seem to have decreased cartel overcharges in the EU. In addition, the EU’s cartel damages directive of 2014 (2014/104/EU) appears to have increased private damage payments. Overall, we find support that these two changes in EU competition policy have a reversing impact on the otherwise increasing trend of cartel overcharges, as these measures tend to make infringements more costly at least in the EU.

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