A newly released pioneering study by the Bureau of Economic Analysis finds that antitrust fines and private damages paid by foreign firms guilty of price fixing added $20.5 billion to the U.S. international Balance of Payments from January 1999 to March 2013. Payments by U.S. antitrust violators of price fixing abroad amounted to $7.3 billion in the same period. The net impact was a positive $13.2 billion contribution to U.S. international accounts.
Of the $20.5 billion in antitrust penalties paid by foreign firms, $6.8 billion (or 33%) were criminal fines imposed by the Antitrust Division of the U.S. Department of Justice. However, the major source of international fund transfers were from civil penalties: $10.6 billion (52%) were settlements reached by foreign firms in private antitrust damages suits with direct buyers, and $3.1 billion (15%) were settlements by foreign firms with indirect purchasers. The BEA relied upon data in the Private International Cartels data set supplied to it by Purdue University Professor Emeritus and American Antitrust Institute Senior Fellow John M. Connor.
Antitrust-related international transfers were by far the largest type of corporate fines and penalties that affected international payments flows. Civil penalties for financial irregularities ($9.2 billion) and for bribery of officials ($3.2 billion) also contributed to these transfers.
This BEA analysis helps identify some of the unaccounted discrepancy between inflows and outflows in the Current Account of the U.S. Balance of Payments Accounts. This is the first time that the impact of fines and penalties for illegal corporate behavior has been linked to the Nation’s balance of payments. It demonstrates once more the economic importance of international cartels. Earlier this year, AAI reported that antitrust penalties for price fixing worldwide had reached 100 billion for the first time.
Source: Christopher L. Bach. Fines and Penalties in the U.S. International Transactions Accounts. BEA Briefing (July 2013), pp. 53-60.