Antitrust Mega Fines in Digital Markets and Their Impact on Compliance: An Overview of EU and US Approaches

This paper conducts a comparative analysis of the EU and US approaches to antitrust enforcement that focuses on mega-fines in digital markets. Despite the shared goals of promoting competition and deterring anticompetitive behavior, the two jurisdictions employ distinct enforcement mechanisms. The EU primarily relies on public enforcement and the imposition of large administrative or quasi-criminal fines by the European Commission and national authorities. In contrast, the US approach places greater emphasis on antitrust damages and punitive measures imposed by the courts, often through private actions brought by competitors and consumers, as well as on public enforcement by the Department of Justice and the Federal Trade Commission. The paper develops a theoretical framework in which to analyze the impact of mega-fines on compliance with antitrust regulations. It demonstrates that the threat of exceptionally large fines can significantly increase the expected cost associated with engaging in anticompetitive practices, making such behavior less attractive to companies. The model incorporates key variables such as the probability of detection, the expected revenue from anti-competitive behavior, the cost of compliance, and the company’s risk aversion and sensitivity to fines. Empirical evidence suggests that the EU’s reliance on mega-fines has prompted some digital market players to change their business practices and has led to closer scrutiny of market practices. In comparison, the US approach, historically influenced by the Chicago School’s laissez-faire ideology, has been less aggressive in imposing large fines, relying more on antitrust damages and private litigation. However, recent developments indicate a shift in the USA, with antitrust authorities taking a more proactive stance towards regulating large technology companies. The initiation of a lawsuit against Apple by the US authorities following a significant fine imposed by the EU may highlight a convergence in the two jurisdictions’ approaches to addressing anti-competitive behavior in digital markets with important sanctions. The paper concludes that the use of mega-fines, as exemplified by the EU’s approach, can be an effective means to foster compliance with antitrust regulations, particularly in digital markets dominated by powerful tech giants. The comparative analysis provides insights into the distinct enforcement mechanisms employed by the EU and the USA, and the potential impact of these approaches on shaping the behavior of digital market players.