The Competition and Markets Authority (CMA) have published a report by DotEcon evaluating the deterrent effect of five Competition Act 1998 (CA98) decisions taken by the CMA and OFT.
Conducted as part of the CMA’s continual evaluation programme, the review presents estimates of the deterrent effect of these CA98 cases and the authority’s follow-up compliance activities. It presents evidence on the beneficial impacts of the CMA’s intervention for consumers arising directly from the enforcement action. It also shows how enforcement activities boost other firms’ awareness of their obligations under competition law.
We find that the indirect effect of intervention in deterring firms from infringement is plausibly a multiple of the direct benefit of stopping abuse by the specific firms subject to enforcement action. Although for any specific firm, the deterrent effect is small, as there is a low probability of that firm being a potential infringer, in aggregate there is significant indirect benefit due to the large number of businesses being deterred from engaging in anti-competitive behaviour.