The chapter examines four economic models, the implications of behavioural economics and the main normative implications of the sanctioning policies. Classical economic analysis of sanctions and crimes presumes that decision-makers are sanctioned directly, personally. Yet this model can only be applied in the case of competition law sanctions levied on the company, if the decision-maker of the firm is at the same time the owner of the company. If companies are sanctioned, the key issue is whether they apply internal sanctions against the decision-maker. Such sanctions can be ex-ante or ex-post, fitted perfectly of imperfectly to the goals of the decision-maker. However, not all companies apply sanctions, some because of agency problems, others because the owners of the company are not able to learn who should be sanctioned and when. There are also cases where the owners are not interested in preventing unlawful decisions even if the company is later sanctioned. The reason for that might be that they do not bear the burden of the sanctions or they make a credible commitment not to levy full (or any) sanctions on managers in order to induce them to take more risks.

Polish competition law is characterized by the strong predominance of public enforcement. The crucial component of the Polish system of sanctions has always been administrative corporate fines regulated in much the same way as under EU Law. So far, however, the Polish competition law does not recognize the concept of the single economic unit. This means that the amount of fine is always calculated on the basis of the whole or a part of a direct infringer's turnover. Similarly the fines imposed on associations of undertakings are calculated exclusively on the basis of an association’s turnover. Such a concept of undertaking contributes to the intensification of one of the problems related to enforcement of Polish competition law: the low level of fines imposed by the Competition Authority (CA). The 2014 ACCP amendment introduced into the Polish system individual administrative fines of up to PLN 2 million (c. EUR 450,000) for intentional infringements of the prohibition of anticompetitive agreements, and remedies which may be imposed with or without a fine. These amendments may have significant impact on the effectiveness of the Polish competition law system, in particular by strengthening the deterrent effect of the decisions of the CA.

This chapter gives an overview of UK competition law sanctions and their objectives, and provides a critical analysis of: the method for calculating fines; the Competition and Markets Authority (CMA)’s leniency and settlement policies; review by the appropriate court; private enforcement; the level of enforcement and compliance with UK competition law; and other sanctions against undertakings and individuals. The major issues in the UK centre on the comparatively low number of cases completed by the CMA and the potential chilling effect of its criminal cartel offence. Brexit creates new opportunities for the UK to design and apply its sanctions in a more effective way and outside of the constraints of EU Competition Law, but it also creates significant challenges – in particular in requiring the scaling-up of the CMA’s enforcement to include cases that were previously investigated by the European Commission on the UK’s behalf.

The chapter looks into the effectiveness of commitment decisions by reviewing selected examples from the European Commission’s jurisdiction. Proceedings with a considerable or often a very high degree of similarity in the air traffic, energy and payment-card industries provide useful insights into the extent to which the preceding decisions influence the behaviour of market participants and the approach taken by the Commission. The author concludes that commitment decisions are likely to be followed by other commitment decisions in similar cases and there is little evidence to suggest that market players voluntarily adjust their behaviour following a commitment case. A few recent examples suggest that this approach might not hold universally, leaving the actual impact of the commitment decisions challenging to forecast. It is argued that the limited deterrence and negative effect on legal certainty in the end limits the advantages of commitment decisions, as procedural efficiencies might evaporate if similar proceedings occur time after time. This, ultimately, may call into question the effectiveness of this tool, as practical examples suggest that the theoretical advantages are often not realised, while the negative effects on legal certainty and the limited deterrence effect are prominent.

The chapter analyses the intersection of competition law enforcement and criminal justice. It sets out the primary theoretical justification for criminal cartel sanctions: (economic) deterrence. Supporters of antitrust criminalisation usually argue that the optimally deterrent cartel fine is too large to be imposed and that a global trend towards criminalisation of cartel activity can be detected at present. What was once primarily a US phenomenon has become international, with countries as diverse as Israel, Brazil and Australia pursuing a policy of cartel criminalisation. This chapter evaluates some of the inherent practical problems with criminal cartel sanctions. It provides insights into how best to ensure that cartel criminalisation improves the effectiveness of a criminalised regime’s competition policy. The chapter comprises two substantive sections. The first outlines the deterrence-based theoretical justification for criminal cartel sanctions. The second critically analyses two important inherent problems that arise when criminal sanctions are used to deter cartel activity: the difficulty of securing efficient competition law enforcement when criminal cartel sanctions are employed; and the need to connect the criminalised cartel activity to morally wrongful behaviour.

The chapter summarizes the most important issues of the research topic, with a special focus on the goals of sanctioning competition law infringements. Without efficient sanctions, there is a serious risk that competition rules would not be taken seriously, which would in turn undermine the performance of our market economy. Sanctions, deterrence and respect for law are inseparable friends. Although there seems to be a global consensus that the ultimate goal is optimal deterrence, this goal exists more on the policy level than in the calculation of the amount of fines and other sanctions in actual cases. The chapter discusses various options for measuring the efficiency of fines, concluding that this discussion can be pursued only at an academic level. A mix of sanctions can bring about optimal deterrence, including personal administrative sanctions. Two hypothetical cartel cases with likely fines imposed in various jurisdictions are presented to show that even similarly structured sanctioning regimes may result in a diverging level of sanctions being imposed due to diverging national approaches.

The sanction system of China’s anti-monopoly law mainly comprises administrative penalty and civil damages compensation, with administrative penalty as the core sanction method. The mode of administrative penalty combining confiscation of illegal income and fines established in the Anti-monopoly Law is not ideal in practice. Confiscation of illegal income is often absent, which greatly affects the deterrent capacity of anti-monopoly sanctions. At the same time, imposing fines is not a sufficient deterrent on its own. To solve the predicament, in the revision of the Anti-Monopoly Law it is proposed to cancel confiscation of illegal income and learn from the internationally mainstream anti-monopoly administrative punishment mode by integrating the function of confiscation of illegal income in the form of fines, that is, replacing it with the fines-oriented anti-monopoly administrative punishment model, in order to make punishment more certain. In addition, China should reform the anti-monopoly law fine system in order to increase deterrence, including clarifying the meaning of “sales”, abolishing minimum fines of 1%, and considering civil damages as a mitigating factor for fines.

The imposition of effective cartel sanctions is shaped by the policy of and guidelines from enforcing authorities, such as the European Commission, as well as the Union Courts. The application of the 2006 Guidelines on Fines has been guided by the jurisprudence of the Union Courts. The Courts have in general upheld the fining methodology expressed in the guidelines and have clarified the way it should be applied in specific situations. The fact that the system of setting and reviewing EU competition fines was found lawful adds to the legitimacy of such fines and their enhanced deterrent effect. The aim of authorities and reviewing courts is to impose adequate and deterrent sanctions, while respecting the rights of defence of the undertakings.