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p. 53 of 62 BACK | NEXT Purpose and Structure of the Toolkit Overview of Practices Controlled by Competition Law Countries with Competition Law Systems Benefits of Competition Policy Practices Controlled by Competition Law Key Concepts and Tools Competition, Privatization, and Regulation Emerging Economies Enforcement Mechanisms Role of the Legislature, the Government and Ministers Independent Competition Authorities Accountable Competition Authorities Design of the Competition Authority Procedures of the Competition Authority Transparent Decision-Making Powers of the Competition Authority Sanctions Leniency Program Competition Law Compliance Programs Administrative Guidance Role of the Courts Miscellaneous Points ADB Resources and Projects Other Resources Glossary and List of Abbreviations

Competition Law Toolkit : Enforcement Mechanisms

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H. Sanctions

For competition law to be effective, there have to be effective sanctions to deter anti-competitive conduct. Companies should be subject to fines. The interesting policy issue today is whether the law should go further and impose sanctions on the individuals responsible for anti-competitive practices. There is the question of whether there should be a criminal offense for cartelization of markets, with the possibility of terms of imprisonment, as is the case in the US, the UK, Canada, Japan and elsewhere. The need for effective sanctions in the fight against cartels was emphasized in the discussion of cartels in Horizontal Agreements.

An additional point that needs to be made in relation to sanctions is that penalties, such as fines and imprisonment, may not be sufficient in ensuring effective conditions of competition. It is also important for competition authorities and courts to be able to make orders, e.g., for the cessation of unlawful conduct. Typically, this will involve a requirement for a cartel to cease operation or for a dominant firm to stop its abusive behavior. In some cases, a positive order (e.g., that a dominant firm supply someone) may be needed instead of a negative one (e.g., to stop charging predatory prices.) And in some fairly rare circumstances, a structural remedy (e.g., requiring a firm to divest itself of part of its assets) may be necessary, rather than a behavioral one that simply requires a firm to change its behavior. Structural remedies are rare in cases of agreements or abusive behavior, but are sometimes necessary in the case of mergers where the parties have already merged their assets but a competition authority sees that the merger will cause a substantial lessening of competition and so should be reversed. An example [ PDF ] of this was given in Mergers. The European Commission has published a Notice on remedies acceptable under the EC Merger Regulation which contains a discussion of the general principles to be taken into account when seeking remedies in merger cases in Europe. It also includes a review of types of remedies, and distinguishes between structural and behavioral ones.

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