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Alison Jones KCL.GWU Conference 18 March 2019. Preventing Corruption, Supplier Collusion and the Corrosion of Civic Trust: A Procompetitive Program to Improve the Effectiveness and Legitimacy of Public Procurement. Background.
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Alison Jones KCL.GWU Conference 18 March 2019 Preventing Corruption, Supplier Collusion and the Corrosion of Civic Trust: A Procompetitive Program to Improve the Effectiveness and Legitimacy of Public Procurement
‘To deter cartel activity, the sanctions imposed on cartel participants must produce sufficient disutility to outweigh what the participants expect to gain from the cartel activity. Moreover, the disutility of the sanctions must outweigh the expected gain by enough to account for the fact that the sanctions may not be imposed at all and would be imposed, if at all, after the gains had been realised.’ Werden
But growing concern that: leniency regimes have limits: • Not used where cartels are profitable and stable? • Only where falling apart anyway? • Strategy for punishing firms deviating from cartels? • Risk of individual sanctions/ damages make less attractive • Must be good track record of enforcement following other techniques to encourage firms to use • Over-reliance may create sub-optimal probability of cartel detection
Effective Penalties: Actions for Damages • Not only deterrent but also compensation for taxpayer • But relatively few examples? • Complex to bring and win and procurers lack incentive and unwilling to sour business relations • Broader standing e.g., to residents on behalf of local government (eg Japan) or public prosecutors • Greater use of existing powers (eg Section 4A Clayton Act – MakenDelrahim promised to reinvigorate) • Cases beginning to emerge in Europe especially eg in Germany • Commission suit in Escalators and Elevators failed