The Bankruptcy Wildcard in Cartel Cases
- Topics:
- Bankruptcies,
- Commercial Lending
- Tags:
- Bankruptcy,
- Business Operations,
- Deterrence,
- EC Enforcement Problem,
- Fine,
- Fines,
- Litigation,
- University Of East Anglia
- Source:
- University of East Anglia
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Overview: Deterrence is achieved when the cost of collusion, given the probability of detection, outweighs the illegal cartel profits. Fines are the only sanction available in the EC enforcement regime and these may need to be raised in order to achieve deterrence. The EC enforcement problem is that fines are effectively capped: high fines can cause insolvency and so there is a trade-off between increased deterrence and the increased risk of bankruptcy. Increasing this trade-off is unacceptable to the European Commission because of the costs and uncertainties associated with bankruptcy, as reflected in the 10% annual turnover cap on fines.
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Format: PDF | Size: 311KB | Date: Jan 2006 | Pages: 36
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