Why Morality Should Be Excluded from the Cartel Criminalisation Debate

Abstract

This paper argues that the use of criminal sanctions against hard core cartels is justifiable on the grounds of preventing harm alone, and that the question of whether price fixing is also morally wrong provides an unhelpful distraction. The criminal law has evolved beyond protecting common morality by only engaging with a small number of the most objectionable acts perpetrated in society. Its traditional links with morality in a religious context are also less relevant today and in some areas the breakdown of these links has resulted in decriminalisation. Although it is true that cartel criminalisation is an extreme form of regulatory control, it is justifiable given the potential harm caused by cartels and the difficulty in identifying the target for direct regulation. Price fixing may occur anywhere in the economy and is not restricted to a small number of identifiable actors. Criminal cartel offences should therefore simply be accepted as a necessary tool with which to punish and (more importantly) deter harmful cartel conduct. Yet, those involved in designing and enforcing cartel offences – principally politicians and competition authority officials – have felt the need to draw parallels between price fixing and theft or fraud. In the UK, legislators went as far as to include the moral marker employed in theft and fraud cases – the standard of dishonesty. However, the acts of price fixing, theft and fraud are not morally equivalent. Price fixing does not require physical interference or violence, nor does it necessarily involve a positive deception. The harm caused by the act of price fixing is often remote (in terms of perpetrator and victim) and widely dispersed, yet it is very significant in its entirety – potentially exceeding the monetary cost of both theft and fraud combined. This paper first discusses why the question of morality is problematic in the context of price fixing and why it is an unnecessary prerequisite to legitimate criminalisation in this context. It then sets out the justification for criminalising cartel conduct on the grounds of preventing harm. It concludes by discussing the implications of a harm only justification for deterrence. Once we accept that the criminalisation of cartel conduct is a necessary incentive to encourage compliance with cartel laws, our focus should turn to the credible threat of enforcement. This is the biggest challenge for cartel criminalisation.