The Law And Economics Analysis Of Anti-monopoly Law Fine

The main purpose of Anti-monopoly Law fine is deterrence. In this paper, thedevelopment of law and economics in deterrence is recognized as the starting point.We have studied the set of Anti-monopoly Law fine based on benefit or harm whenthe marginal cost of an additional payment equals to the social marginal benefit fromreduced crime in the optimal deterrence theory. By increasing the offender’s expectedcost, the profit-based Anti-monopoly Law fine regard the offender’s cost-benefitparadigm as the research object. It makes the offenders forgo further action to achievea strong deterrent effect. While the detriment based Anti-monopoly Law fine isanalyzed from the perspective of the total social cost. The cost of the offender in theoffense is less than the total cost borne by society, which brings the net harm tosociety and the enforcement cost increase. As a result, the core of Anti-monopoly Lawfine’s standards should punish the offenders bear the full cost. Because of theprobability for enforcement authorities identifying and punishing the violations, theactual fines should be set at the nominal fines/punishment probability level, so as toachieve effective deterrence purposes.The overcharge in a monopoly market is the main reason for the firms. If theprofits are measured by the sales of illegal enterprises, percentage price increase dueto the cartel, demand elasticity at the competitive price and the competitive mark-upare three leading factors. In the assumption that demand elasticity and the competitivemark-up are at zero, the percentage price peaks the maximum. At this time, the ratioof overcharge to sales is only affected by the price increase percentage——animportant indicator of the market price control for the manufacturers. Meanwhile, thepenalty to illegal business is not for the excess profits, but for the net harm to others.It leads to a decline in social welfare and a low efficiency in resource allocation state.The development of Anti-monopoly Law fine system has experienced fromuncertainty to certainty, from fixed to percentage. Only the constant innovation can achieve effective deterrence in legal sanctions. Due to the privacy and evidentiarydifficulties in Cartel cases, Leniency Program was introduced to the AntimonopolyLaw. It provides incentives to reduce or waive fines for cartel members as a rewardfor their initiative report concerning monopoly agreement. The implementation ofLeniency Program effectively improves the chances of enforcement agencies to findand punish violations, and further enhance the deterrent effect of law enforcement.Because of the deviation between theoretical and enforcement practice, there is a poordeterrent effect. Further innovations should be put into effect to reach deterrenteffectiveness.Chinese Anti-monopoly Law has only made some principal stipulations andcompetition authority needs administrative explanations. However, the lack ofrestraint and anti-monopoly law enforcement experience in our current system causessome problems, such as non-uniform enforcement standards, ambiguous and notoperational anti-monopoly law fines for original copy and simple replace. Theseissues all lower the effectiveness to anti-monopoly law fines. In view of the studiesabove, this paper is based on the optimal deterrence theory, trying to build the relevantsupporting regulations and implementation rules to improve clarity and predictabilityin penalty system. Then the competition authorities can not only utilize the regulations,but also avoid denial of justice.Finally, given the above analysis, we propose that the implementation of Chineseanti-monopoly Law should be based on market economy and should not blindlypursue enforcement performance. Besides a modest deterrence, the purpose ofanti-monopoly law includes promoting and raising the awareness of competingoperators. So we should develop a unified, specific fine guide and improve theLeniency Program, in order to promote our anti-monopoly law fine system to achievedeterrence effectiveness, creating an orderly competitive environment.