Antitrust Fines: Experiences from China

Antitrust fines are usually set for restitution and to dissuade potential offenders. The seriousness and duration of the offense usually determines the size of the fine imposed. Aggravating circumstances can also influence the size of the fine, while attenuating factors result in leniency. Economists have developed the "optimal fine" theory as a guiding principle in setting antitrust fines. Using a sample of fines that were imposed on 76 companies in China, we find that actual fines are strongly correlated with what the optimal fine theory predicts, while the price overcharge ratio appears quite moderate: at only 4.9% on average.