eThesis - School of Business electronic theses

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Abstract:

Objectives of the study The objective of the thesis was to investigate how the social damage that is caused by cartels could be minimized. An important question is that should cartels be viewed as an administrative felony by the company, as a personal felony by the cartel’s managers or both. Different systems of cartel penalties, confession rewards and detection systems are evaluated in order to understand how the legislation could be modified so that cartel activity is most effectively discouraged.

Methodology The study was mostly conducted as a literature review. Academic literature, legislation and authority reports were analyzed in estimating the effect of different anticartel procedures. The effects of different policies were evaluated using data from past cartel trials. Cartel punishments in the European Union were analyzed using an Ordinary Least Squares regression.

Results of the Study The main findings are that offering reduced punishments (leniency) to confessors or the cartel (whistleblowers) has a destabilizing effect which can also be verified empirically. Without a confession, the evidence of collusion is rarely sufficient for a conviction. Offering positive rewards to whistleblowers is found theoretically useful, but empirical evidence is still scarce. Both theoretical and empirical evidence suggests that personal punishments should be imposed on cartel managers in order to reduce collusive damage. Such punishments are still missing in several OECD countries, including Finland.