In a letter to the United States Sentencing Commission (USSC) pursuant to its request for public input on its priorities for the coming year, the American Antitrust Institute (AAI) calls for the Commission to reconsider a key portion of the formula it uses to calculate fines for antitrust offenses. This reconsideration should cause the current fines for illegal price fixing and similar collusion offenses to at least double.
Currently the USSC uses a formula based upon the unsupported and unduly low presumption that illegal price fixing increases prices by 10 percent on average. “In recent years, however, a number of studies have re-examined this issue…. determin(ing) that price fixing actually raises prices by more than 20 percent regardless whether average or median measures are used,” says AAI President Bert Foer, pointing to the article by AAI’s professors John M. Connor and Robert H. Lande, “Cartels As Rational Business Strategy: Crime Pays” in a recent issue of the Cardozo Law Review. “The evidence from litigated verdicts and academic studies both show that the USSC estimate should at the very least be doubled.”
In their paper, Connor and Lande conclude that raising the presumption of illegal overcharge to 20 percent would result in a considerable increase in the funds available to the Crime Victim’s fund for compensating victims of violent crimes, as well as lead to more nearly optimal deterrence of price fixing and other cartel behavior.