Antitrust, Agency and Amnesty: An Economic Analysis of the Criminal Enforcement of the Antitrust Laws Against Corporations


The recent imposition of record fines on large corporations has been publicly touted by the Antitrust Division as a measure of success. In this article, it is suggested that extension of this policy should be taken with some caution. Because criminal fines are not accurate measures of loss, and because of the vicarious nature of corporate liability, there is a great danger that higher-than-optimal penalties will induce corporations to incur excessive costs in an attempt to avoid these high fines. The potential overdeterrence costs resulting from higher-than-optimal fines is exaggerated by the Antitrust Division's expanded use of the Corporate Leniency Policy. Ironically, the costs of overdeterrence will result in higher prices to consumers, a decrease in welfare, and, ultimately, in the exact effects that the criminal antitrust laws are intended to prevent.