Penalty Regime Research Articles

A Study Beyond the See-Saw of Relevant and Global Turnover: Finding a Mechanism for Adequate Penalty

The Competition Act, 2002 (the Act) is the governing legislation to enforce compliance against antitrust practices in the Indian market using multiple tools, the primary being the imposition of penalties. Penalties have the effect of punishing offenders and deterring others. Under the current legislation, one of the crucial aspects while computing the amount of penalty is determining the “turnover” of the undertaking, as it is used as a proxy to determine the base fine. There exist other proxies, but “turnover” is the most accepted globally. The act of imposing a penalty is also accompanied by ensuring a balance i.e., the fine should be adequate to deter and should not be excessive to break the undertaking. Hence, the imposition of a penalty is not a mere mathematical exercise but a judicious one. With this backdrop, focusing on the Indian Competition Law, the authors in this paper will comprehensively analyze the concept of “turnover” along with an evolutionary analysis of its different shades i.e., relevant, and global turnover, and how they have failed to help in fulfilling the core objectives of the penalty regime. In the latter part of the paper, the authors provide an alternative perspective based on foreign jurisprudence to argue that “turnover” is not the only proxy available and demonstrate the best practices from around the world. Lastly, having understood the strengths and weaknesses of relevant and global turnover and gained an international perspective, the authors will be suggesting a flexible approach in the context that Indian antitrust authorities will have multiple tools/proxies at their disposal for tackling every situation with the best possible approach, but this flexibility will be exercised within a particular framework/guideline. This holistic approach is essential, as considering just relevant or global turnover would eventually defeat the very purpose of imposing penalties.

Kantian–Nashian interaction and petty tax corruption in developing countries

PurposeThis paper attempts to develop a simple, static model of tax administration that is capable of explaining the widespread collusive petty tax administration corruption observed in developing countries.Design/methodology/approachThis paper utilizes a positivist research framework and adopts a theoretical method of analysis, although secondary data will also be mentioned to support theoretical arguments whenever it is appropriate to do so.FindingsA high rate of collusive tax corruption is inevitable in developing countries.Research limitations/implicationsThe model is static and needs to be extended into a dynamic model.Practical implicationsTraditional enforcement tools such as higher audits or a higher penalty regime against tax evasion do not work. Tax simplification can lessen the incidence of tax corruption.Social implicationsFighting tax corruption requires significant changes in the attitudes of taxpayers and tax auditors.Originality/valueThis paper combines the literature on Kantian economics and tax compliance in an innovative fashion.

The strategic interaction between cartels and anti-trust authorities

We present a model of the interaction between firms agreeing on a degree of collusion and a competition authority that simultaneously determines the allocation of resources to enforcement of anti-trust legislation. An increase in demand is associated with tougher enforcement and a lower degree of collusion. A stronger competitive pressure first decreases the degree of collusion and increases the level of enforcement, then increases both the degree of collusion and the level of enforcement, and eventually increases the degree of collusion and decreases the level of enforcement. Simulation results indicate that a move from the EU penalty regime to the tougher US standard with treble damages would mainly impact on the enforcement intensity and to a much lesser extent affect the degree of collusion.

“Lots of Time They Don’t Pay”: Understanding Wage-Theft and Resistance in Bryan, Texas through Critical Community-Engaged Research

This critical community-engaged mixed methods study quantifies worker mistreatment on day labor corners in Bryan, Texas, and examines how day laborers resist labor exploitation. Day laborers seek work in open air spot markets. The work is precarious, with temporary and unregulated employment relations, weak enforcement, and poor working conditions. In this weak penalty and labor enforcement regime, labor violations are not surprising. Contrary to dominant theories, however, we argue that demand-side (industry) characteristics are more important for explaining the prevalence of labor violation than supply-side (worker characteristics). We use the Central Texas Day Labor Survey (2012–2021), 210 ethnosurveys consisting of 55% unauthorized workers, 24% authorized workers, and 20% Latinx, Black, and White citizens. We find that higher indices of labor violations and work abuse are not associated with lower-status workers; all workers, irrespective of legal status or citizenship, experienced abuse by employers. Demand-side characteristics were partially associated with higher levels of wage theft and mistreatment. In terms of wages, we found a gradation of wages with the lowest for unauthorized immigrants, then authorized immigrants, Latinx citizens, Black citizens, and lastly White citizens. Finally, workers collectively fight back against injustice by warning each other about unscrupulous employers.

How a “fine regime” of an unacceptable user behaviour policy affects library use: nudging or shoving?

A discussion of long-term thefts in the library suggested creating a highly punitive policy that captures the dynamics of the context through a holistic approach. The study inquired about how the penalty regime affects the attitudes of students and library staff toward fines. Data was collected through in-depth interviews to reveal three groups' attitudes: offenders, principled users, and staff. Twenty staff were interviewed, and forty of the students interviewed were registered users, 20 of whom had previously been fined for attempting to steal books, while the rest had no record of policy violations. The findings show that 30% of students were aware of the existence of the written policy only after being punished, which indicates that they were not given proper library orientation at the outset. The paper discusses how heavy fines and banishment from the library impacted attitudes toward the services offered in the building. Feedback from participants can be part of an early warning system used to maintain a high-level of service quality minimizing security issues.

Capital Punishment in Singapore: A Critical Analysis of State Justifications From 2004 to 2018

This article examines state justifications for capital punishment in Singapore. Singapore is a unique case study because capital punishment has largely been legitimised and justified by state officials. It illustrates how Singapore justifies capital punishment by analysing official discourse. Discussion will focus on the government’s narrative on capital punishment, which has been primarily directed against drug trafficking. Discussion will focus on Singapore’s death penalty regime and associated official discourse that seeks to justify state power to exercise such penalties, rather than the ethics and proportionality of capital punishment towards drug-related crimes. Critical analysis from a criminological perspective adds to the growing body of literature that seeks to conceptualise social and political phenomena in South-East Asia.

Combining cartel penalties and private damage actions: The impact on cartel prices

In many countries antitrust enforcement by Competition Authorities through prosecution and the imposition of penalties is complemented in price-fixing cases by private damage actions, which should affect both cartel deterrence and the prices set by those cartels that do form. We show that the impact of combining penalties and damages on cartel prices is not clearcut, and depends on both the nature of the penalty regime and the way that damages are calculated. We demonstrate this by focusing on two ways of calculating damages that have been advocated in practice and two different forms of the widely used revenue-based penalty regime. When the simple form of revenue-based penalties is in force, the standard method of calculating damages worsens its harmful pricing effects, whereas the proposed alternative method of calculating damages can overturn them. When a more sophisticated form of revenue-based penalties is in operation, imposing damages will improve its beneficial pricing effects under both methods of damage calculation, but the alternative method is more effective. In all cases combining penalties and damages improves deterrence.

Regulations: Burden or insurance?

Effective regulation is in the interest of banks — the implemented regulatory requirements make sure the sector becomes more resilient against future financial shocks and makes the banking system safer. Increasing regulatory requirements put pressure on the financial sector, in terms of human resources, IT (information technology) investments and overall implementation costs. Banks need to focus on efficiency, optimising costs and processes, while leveraging on automation and digitisation. The cost of regulation — both in terms of implementation and monitoring — can be allocated with different methodologies to the provided services and products. The aim of financial participants is to offer these services and products under a proper pricing structure where the overall customer offering remains competitive and, most importantly, sustainable in the long term. The CSDR Penalty Regime will be one of the key challenges of the post-trade infrastructure, as it is still not known how service providers and the entire value chain will be able to address the administrative, technological and financial implications. It is critical to address the main inefficiencies before the settlement discipline regime comes into effect, in order to avoid expected high penalty charges. Keeping a strict regulatory regime is important to lower the risk profile of the banking industry, the compliance of which shall be part of the ‘business as usual’ daily banking activities, ensuring the safety of clients’ assets at all times, even under difficult financial periods.

Penalising on the Basis of the Severity of the Offence: A Sophisticated Revenue-Based Cartel Penalty

We propose a new penalty regime for cartels in which the penalty base is the revenue of the cartel but the penalty rate increases in a systematic and transparent way with the cartel overcharge. The proposed regime formalises how revenue can be used as the base while taking into account the severity of the offence. We show that this regime has better welfare properties than the simple revenue-based regime under which the penalty rate is fixed, while having relatively low levels of implementation costs and uncertainty. We conclude that the proposed penalty regime deserves serious consideration by Competition Authorities.

The uniformity of taxation penalties in Australia

Taxation penalties are a significant yet often ignored factor in the consideration and evaluation of tax systems when considering reform. The purpose of this article is to explore the arguments for and against the uniformity of taxation penalties using the Australia uniform tax penalty system in pt 4-25 of the Taxation Administration Act 1953 (Cth) as an illustrative case in point. This article firstly assesses the system in Australia for internal congruency and examines whether pt 4-25 has successfully created a 'one stop shop' for penalties. The answer to this is that pt 4-25 has certainly reduced undesirable complexity. The seamless addition of the Minerals Resource Rent Tax has proved one of the advantages of such a system, but there are some issues that are worthy of further reform. The article secondly examines whether the uniformity of penalties ought to be prescribed and concludes that there are arguments against uniformity that have contributed to a number of jurisdictions retaining a more specific penalty regime.

Bank Resolution 10 Years From The Global Financial Crisis: A Systematic Reappraisal

Since 2010 most Group of Twenty (G20) jurisdictions have introduced new recovery and resolution regimes to deal with bank failures. The common objective of these regimes is, first, to facilitate the orderly failure of financial institutions and, second, to redirect the bulk of losses to the private sector, thereby eliminating the need for public bailouts. Stringent creditor monitoring of bank risk is presumed to constrain excessive leverage because otherwise shareholders and managers will increase leverage to maximize returns on equity (ROE). Thus, the threat of a creditor bail-in should eliminate the TBTF subsidy and should also contain the governance costs that accompany excessive leverage curtailing managerial rents. Despite significant progress to meet resolution objectives, concerns remain on whether the present arrangements will work effectively in a systemic crisis. Such skepticism centres on whether bailing in the creditors of a cross-border institution, including the conversion of pre-funded liabilities such a TLAC and MREL, would prove sufficient to prevent the bailout of a global systemically important financial institution (G-SIFI). There are also concerns about the possibly undesirable consequences of bank bail-ins when the failure is systemic rather than idiosyncratic. Finally, it is not known to what extent resolution regimes are sufficient to mitigate moral hazard, especially in the absence of an ex post penalty regime for bank managers. This paper discusses these issues in context and tries to articulate the normative values attached to resolution regimes highlighting the prevalent lack of clarity and the overlapping and sometimes conflicting nature of resolution objectives under present frameworks. Then the paper focuses on the implications of draconian creditor bail-in regimes and advocates a more relaxed approach to the provision of liquidity in resolution to avoid fire sales.

PUBLIC AND PRIVATE ANTITRUST ENFORCEMENT FOR CARTELS: SHOULD THERE BE A COMMON APPROACH TO SANCTIONING BASED ON THE OVERCHARGE RATE?

ABSTRACT We review recent theoretical literature pointing to the ineffectiveness, in terms of welfare impact, of currently applied sanctioning regimes for cartels by Competition Authorities (CAs). We then provide a comparison of the regimes taking also into account criteria related to ease of implementation and transparency. We argue the case for switching to a penalty regime, in which the penalty base continues to be the currently dominant penalty base of cartel revenue but in which, in contrast to current practice, the penalty rate is based on the rate commonly estimated in order to calculate damages in private damage claims, that is, the overcharge rate.

Rep v. Chimkango: The Application of Kafantayeni to Pre-resentencing Appeals Against the Mandatory Death Penalty in Malawi

Despite confirming in several decisions that the striking down of the mandatory death penalty in Kafantayeni v. Attorney General entitled all offenders sentenced under the mandatory death penalty regime to a fresh hearing on sentence, the Malawi Supreme Court of Appeal (MSCA) entertained appeals against the original (now unconstitutional) mandatory death sentences in the absence of resentencing hearings in the High Court. The question that arose in Rep v. Chimkango was whether the High Court has the jurisdiction to hold a resentencing hearing in respect of a death sentence which had already been confirmed by the MSCA on appeal. The High Court, considering itself bound by judicial precedent and wary of running afoul of the doctrine by ‘faulting or refusing to be bound by’ the MSCA's decision, remitted the case to the MSCA for directions or resentencing. This article explores the High Court's decision and the status of appeal decisions against mandatory death sentences before the resentencing hearings. It argues that by entertaining these appeals, the MSCA dubiously assumed an original criminal jurisdiction mode within the confines of appellate principles instead of dismissing them as premature and directing the appellants to pursue a resentencing hearing in the High Court. The article also faults the decision of the High Court for not affording the accused a resentencing hearing.

A aplicação pelo juiz de medida diversa da estabelecida em sentença judicial condenatória: uma análise do ativismo e do garantismo judicial

A presente pesquisa analisa as decisões judiciais que estabelecem formas de cumprimento diversas do aplicado ao sentenciado, em virtude da ausência de vagas em estabelecimentos penais adequados. Tal ato do Poder Judiciário representa o exercício do ativismo judicial para a garantia de direitos fundamentais do preso, em especial, o direito da dignidade da pessoa humana. No desenvolvimento deste trabalho, examinaram-se as nuances do ativismo e do garantismo penal, bem como as decisões judiciais que aplicam regime diferenciado de pena diverso do estabelecido. A metodologia utilizada foi do tipo bibliográfica e documental, de abordagem qualitativa, com fins descritivos e exploratórios, concluindo-se que a aplicação do regime menos gravoso de pena, quando da ausência de vagas, no âmbito do sistema penitenciário, promove o garantismo penal por meio do ativismo judicial, como forma de concretização dos direitos e garantias individuais dos presos dispostos na Constituição Federal de 1988.

Detect and Deter or Catch and Release: Are Financial Penalties an Effective Way to Penalise Deliberate Tax Evaders?

Tax penalties play an important and often undervalued role in the tax system. They primarily serve two functions: to deter non-compliance, and to reinforce community perceptions that the tax system is fair because non-compliant taxpayers will suffer consequences. Most tax penalties are administrative financial penalties imposed by the tax authority, ranging from minor penalties to financial penalties imposed on deliberate tax evaders. This exploratory paper draws on new data relating to payment of tax penalties for false and misleading statements. The data is subject to limitations and qualifications as detailed in the paper. Overall, the data shows that the majority of financial penalties imposed on deliberate tax evaders are never paid. The paper then seeks to explain how this can serve to undermine the effectiveness of these penalties. The paper reviews literature explaining the role of tax penalties and the hallmarks of effective tax penalties. It also reflects on a chapter of Australian tax history where community perceptions that tax evaders were not being effectively penalised jeopardised the perceived fairness of the tax system. The paper argues that if the current tax penalty regime is not strengthened then this will likely pose a risk to the perceived fairness of Australia’s tax system, and it therefore proposes some potential solutions, including arguing for two new penalties to be introduced into the regime.

“On the other hand the accused is a woman…”: Women and the Death Penalty in Post-Independence Ireland

Hannah Flynn was sentenced to death on February 27, 1924. She had been convicted of the murder of Margaret O'Sullivan, her former employer. Hannah worked for Margaret and her husband Daniel as a domestic servant, an arrangement that ended with bad feeling on both sides when Hannah was dismissed. On Easter Sunday, April 1, 1923, while Daniel was at church, Hannah returned to her former place of work, and killed 50-year-old Margaret with a hatchet. At her trial, the jury strongly recommended her to mercy, and sentence of death was subsequently commuted to penal servitude for life. Hannah spent almost two decades in Mountjoy Prison in Dublin, from where she was conditionally released on October 23, 1942 to the Good Shepherd Magdalen Laundry in Limerick. Although there is no precise date available for Hannah's eventual release from there, it is known that “a considerable time later,” and at a very advanced age, she was released from the laundry to a hospital, where she died. The case of Hannah Flynn, and the use of the Good Shepherd Laundry, represents an explicitly gendered example of the death penalty regime in Ireland following Independence in 1922, particularly the double-edged sword of mercy as it was experienced by condemned women.

The Law and Economics of Merit Goods: Discussion of The Future of Law and Economics

This short essay, presented in a symposium on Professor Calabresi’s book The Future of Law and Economics, focuses on the law and economics of merit goods—goods such as human organs, babies, and votes—whose allocation through ordinary market transfers is forbidden. It discusses the proper penalty regime for individuals who violate merit goods laws, offers a non-consequential justification for these laws, and elaborates on Calabresi’s “moral costs” concept. As many graduate students, I anticipated that my time in law school would be dedicated to acquiring professional skills. After all, I came to New Haven after a prolonged period of being a student, and my assumption was that law school would be just like the academic things I did before. My tort class with Prof. Guido Calabresi (hereafter, Guido), in the beginning, indeed seemed to run the regular course. And then, about three or four weeks into the semester, in what I assumed would be just another regular class, Guido talked about Mussolini, the Nuremberg trials, his experience as an immigrant and, more generally, about blaming, responsibility, and the tort system. When Guido finished, there was silence. A silence like I had never heard before. Guido left the classroom, but everyone remained seated. No one talked, no one moved. Only after a few minutes, when students of the next class entered, did we rise and quietly move out. The rest of the semester was very much like that particular class: we learned about torts, and so much more.

Constitutional Court Lambastes 1998 Penalty Regime

The decision of the Constitutional Court in Farrugia Anthony P v. Prime Minister Et (2017), wherein it was determined that the 1998 tax penalty regime created an excessive burden on taxpayers, has resulted in a significant abatement of interest and penalties. The author, in this note, comments on the impact of the decision.

Penalizing on the Basis of the Severity of the Offence: A Sophisticated Revenue-Based Cartel Penalty

In Katsoulacos, Motchenkova and Ulph (2015) we examined the welfare properties of a number of monetary penalty regimes for tackling cartels, including revenue-based penalties (the most widely used regime), illegal gains-based penalties, and overcharge-based penalties. We showed that the latter regime welfare-dominates the others. However it is subject to criticism on the grounds of legal uncertainty and high implementation costs. In this paper we focus on analysing an alternative regime: a sophisticated revenue-based penalty regime in which the penalty base is the revenue of the cartel but the penalty rate depends on (and increases with) the cartel overcharge rate. Thus, in contrast to the currently employed simple revenue-based regime, the proposed regime penalises cartels taking also into account the severity of their offence in terms of the height of their overcharge. We show that this hybrid regime can effectively replicate the desirable welfare properties of an overcharge-based penalty structure while having very low levels of legal uncertainty and implementation costs.

Amendments to Transfer Pricing Provisions

A new law came into effect on 1 January 2017 that affects numerous transfer pricing areas, including the criteria for controlled transactions; requirements regarding transfer pricing documentation and the annual transfer pricing report; transfer pricing methods and their application; sources of information for application of the arm’s length principle; the penalty regime; and the assessment of tax liabilities.