AAI Working Paper #04-05 Abstract: PRICE-FIXING OVERCHARGES: LEGAL AND ECONOMIC EVIDENCE Author: John M. Connor, Professor, Purdue University; Advisory Board of the AAI This paper is a survey identified hundreds of published social-science studies of private, hard- core cartels that contained 674 observations of long-run overcharges. The primary finding is that the median cartel overcharge for all types of cartels over all time periods is 25%: 18% for domestic cartels, 32% for international cartels, and 28% for all successful cartels. In addition, a survey of 24 final verdicts in decided U.S. horizontal collusion cases reveals an average median overcharge of 21% and an average mean overcharge of 30%. Outside the United States, 62 decisions of competition commissions cited median average overcharges of 29% and a mean of 49%. These findings suggest that U.S. and non-U.S. cartel penalties ought to be increased. Despite the evident increases in cartel detection rates and the size of monetary fines and penalties in the past decade, a good case can be made that current global anticartel regimes are under-deterring. Keywords: cartels, overcharges, international antitrust, penalties and fines. Date: November, 2004 Author Contact: John M. Connor,
[email protected] AAI Working Papers are works in progress that will eventually be revised and published elsewhere. They do not necessarily represent the positions of the American Antitrust Institute. 1 Draft – Nov. 8, 2004 PRICE-FIXING OVERCHARGES: LEGAL AND ECONOMIC EVIDENCE John M. Connor* Staff Paper No. 04-16, Purdue University, Dept. AE * This working paper was prepared simultaneously with Connor and Lande (2004).