Eva Isager-Sally

Student thesis: Master thesis


Hard-core cartels are considered as the worst infringement of The Treaty on the Functioning of the European Union Article 101(1) (TFEU). These hard-core cartels leads to overcharges and the economically loss is estimated to many billion dollars per year by the OECD. The European Commission (EC) estimates the overcharges to be within in the range of 10 to 40% with an average of 20%. The EC has the competence to fine companies who are in breach of The Treaty pursuant to Regulation 1/2003, art. 23(2)(a) within the limit of 10% of the company's total value of sales. The fines issued by the EC have become more and more severe during the years and are currently at the highest level ever. When exercising the power to impose fines the EC enjoys a wide range of discretion which enables the EC to exercise their power in the pursuit of bringing infringements of art.101(1) TFEU to an end. This thesis analysis the Guidelines on the method of setting fines imposed pursuant to Article 23(2)(a) of Regulation No. 1/2003 (the Guidelines). The Guidelines are issued in order to ensure transparency and impartiality on the method used by the EC but for the calculation of fines the EC uses their discretion. Based on the EC's decisions and the European Court of Justice's jurisprudence, the analysis purpose is to find out to which extent a company will be able to calculate a possible future fine before entering a horizontal hard-core cartel. Due to the EC's wide discretion the company will have difficulty estimating the fine and in the economically part the impact of this insecurity on the company's reflections of participating in a hard-core cartel will be analyzed. These reflections will be analyzed by use of game theory in order to find out whether the insecurity of the level of fine will strengthen the company's incentive compatibility constraints for collusion. At the end of the thesis the theory will be used in an example to illustrate the impact of the limited possibility of predicting the fine on a company's economically reflections.

EducationsMSc in Commercial Law, (Graduate Programme) Final Thesis
Publication date2011
Number of pages87