THE SETTLEMENT REDUCTION IN EU CARTEL CASES: DO SETTLING PARTIES SETTLE UP?

ABSTRACT The European Commission has introduced a fixed reduction of cartel fines to incentivize undertakings to agree to settle cartel cases in the European Union. Several scholars have theorized that settling undertakings in fact receive a larger reduction through the cooperative nature of the settlement procedure. Existing research has not systematically explored how the European Commission exercises discretion in settlement procedures. This study addresses this gap by applying public choice theory to develop a theoretical framework why settlement procedures might provide undertakings with benefits that are not mentioned in the relevant legal framework. Next, it empirically tests this theory by examining cartel fine reductions as a form of settlement benefit. To test this theory, the study conducts an ordinary least squares regression on cartel fines imposed in the European Union from 2010 to 2024. Contrary to expectations, it indicates that a settlement procedure in itself is not associated with a decrease, but rather an increase of fines. This remains true even after controlling for legally relevant facts in the fine calculation. These findings underscore the necessity of further empirical research on how the settlement procedure may shape the content of cartel decisions and the broader benefits firms may derive from settlement.