Sanctions in Antitrust : What for? Compensation, Dissuasion? Transatlantic Approach

Law & Economics workshop organized by Concurrences Review in partnership with McDermott Will & Emery and Microeconomix.

Emmanuel Combe

Anti-trust fines: economist’s reflections

If the economy is really to become the main focus of sanctioning, then this should be done in a consistent and systematic way; this would lead to consideration not only of the extent of the damage to the economy but also of how deterrence and duration of practices should be taken into account.

While the texts relating to sanctions - essentially the NRE Act (2001) and the communiqué on sanctions (2011) - clearly have an economic dimension, we should not overestimate the importance of the economy - both as content and as a method of analysis - in the determination of sanctions. Two examples provide evidence of this.

First example: the concept of "deterrence". The explanatory memorandum of the NRE Act states that one of the objectives of the text is "to reinforce the dissuasive character" of sanctions. This immediately speaks to the economist, accustomed since the work of Gary Becker, to the view that an effective sanction is intended first and foremost to deter the officer from breaking the law. Indeed, a rational and risk-neutral agent will compare the expected illegal gain with the sanction incurred, which is itself the product of the average sanction and the probability of being caught. Studies on the probability of detection converge to say that it would range between 15 and 30 per cent. If the economic approach were to be strictly applied - which would also raise questions from the perspective of individualization of penalties - a multiplier coefficient would have to be systematically applied to the illicit gain (or "damage to the economy"), ranging from... 3 and 6! This is not the solution adopted, as the statement on penalties merely provides for the Authority to increase the amount of the penalty under individualisation in order to "ensure that the financial penalty is both dissuasive and proportionate" (paragraph 47) and in practice up to 1.5 times the "basic amount", which combines the seriousness of the practice and the damage to the economy.

Photos © Léo-Paul Ridet.

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  • Analysis Group (Paris)
  • University of Paris I Panthéon-Sorbonne
  • McDermott Will & Emery (Paris)
  • Franklin (Paris)