The Regressive Nature of Civil Penalties
International Review of Law and Economics
The US Federal Trade Commission (FTC), which enforces the Clayton, Sherman and FTC Acts, has statutory authority to seek civil penalties in district court against firms found in violation of the Commission’s rules and orders. Although fines may be imposed on firms found not in compliance with certain antitrust orders, civil penalties have heretofore been assessed by the FTC only in consumer protection matters. The provisions of the law which authorize such penalties are vague with respect to how the Commission should determine the size of the fines it assesses, stating only that penalties shall not exceed $10000 for each violation, each day of non-compliance constituting a separate violation. In arriving at the total amount, the Commission is instructed to consider ‘the degree of culpability, and history of prior such conduct, ability to pay, effect on ability to continue to do business, and such other matters as justice may require.” Thus, the Commission has substantial discretion in using fines as an enforcement device.
The Regressive Nature of Civil Penalties” (with Phyllis Altrogge), International Review of Law and Economics 4 (June 1984), pp. 55–66; reprinted in Robert J. Mackay, James C. Miller III and Bruce Yandle (eds.), Public Choice and Regulation: A View from Inside the Federal Trade Commission, Stanford, CA: Hoover Institution Press, 1987, pp. 240–254.