This article sets out to verify if and to what extent the 2006 Guidelines allow the Commission to set fines that effectively deter firms from engaging in anticompetitive practices. The first two sections present a standard economic analysis of the optimal sanction. The results of this analysis are then compared with the fine setting methods of the 1998 Guidelines and, to a deeper extent, the 2006 Guidelines. Thereafter three main conclusions deriving from this analysis are discussed. First, the method adopted in the new Guidelines seems more economically oriented in comparison to the previous one but does not completely follow the optimal sanction approach. Moreover, the new Guidelines now use a gain based fine as opposed to a harm based one. Second, the 2006 Guidelines regard factors such as the offender’s personal behaviour and psychological attitude as relevant to determining the fine as well as objective factors such as the offender’s gain or harm to society. Third, the 2006 Guidelines are capable of setting a fine at the optimal level of deterrence, even though they apply a different method. This level, however, is not possible when a fine exceeds 10 per cent of a firm’s total turnover, which is the fine’s legal maximum as provided by Regulation 17 and reconfirmed by Regulation No. 1/2003.
World Competition