Antitrust Law Daily Wrap Up, ANTITRUST NEWS: AAI urges Sentencing Commission to double cartel overcharge presumption, (Aug 4, 2014)

The American Antitrust Institute (AAI) has sent a letter to the U.S. Sentencing Commission (USSC), urging that it increase the cartel overcharge presumption to 20 percent. This 10 percent jump, according to the AAI, “would move the [U.S. Sentencing Guidelines] in the direction of both recent and historical evidence on average overcharges likely to result from collusion, yet still be a conservative resolution of the issues.”

The AAI’s letter is in response to the USSC’s Notice of Proposed Priorities and Request for Public Comment, which proposed priority policy issues, including—in part—a study of antitrust offenses, and examination of the fine provisions of sec. 2R1.1. According to the AAI, there are three important points about the U.S. Sentencing Guidelines’ cartel overcharge presumption: (1) “the evidence demonstrates there currently is significant underdeterrence of price fixing and other anticompetitive forms of horizontal collusion;” (2) “the general approach to calculating cartel fines embodied in the [sentencing guidelines], which utilize a specific presumed overcharge, is sound and in the public interest;” and (3) “the 10% cartel overcharge presumption in the Guidelines is much too low to achieve deterrence.”

The USSC originally estimated in 1987 that price fixing on average raises prices by 10 percent, but the AAI now suggests that this estimate is demonstrably low. Specifically, it cited studies finding that median cartel overcharges are around 22 or 23 percent, while average overcharge results range from 31 to 49 percent. Consequently, the AAI concluded that’s its recommendation that the USSC double the 10 percent presumption is actually conservative, but more likely to deter cartel behavior.

AAI’s comment was in response to a June 2014 request from the USSC for comments on the antitrust sentencing guidelines.

Companies: American Antitrust Institute

News: Antitrust