In 2007 the European Commission issed the largest fine in the EU’s history- a whopping €990 million (that’s $1.3 billion, folks). In spite of recent criticism, an EC spokesman revealed that the Commission intends to continue increasing fines. As EC spokesman Jonathan Todd explained, the Commission has “increased the level of fines . . . to deter companies from indulging in this behavior.” He further clarified that fines are intended to reflect the scale of the market, a company’s size and the long-term effects of the cartel.

Critics of the record-high cartel fines present two arguments: (1) companies will eventually raise consumer prices to compensate for their losses; and/or (2) the penalties are so high that further increases won’t make a difference.

EC Competition Commissioner Neelie Kroes countered these arguments when the EC announced its €990 million fine against various elevator manufacturers in February: “The damage caused by this cartel will last for many years . . . the memory of this fine should last just as long.”

Commentary: This is a trend that we have been predicting for some time. It’s one more reason for global corporations to beef up their European compliance and ethics programs. To add even more fuel to this growing need, German prosecutors are now lobbying for new laws embracing criminal penalties for corporations.