Leniency programs (or policies) reduce sanctions against cartel members that self-report to the Antitrust Authority We focus on their ability to directly deter cartels and analogous criminal organizations by undermining internal trust, increasing individual incentives to 'cheat' on partners Optimally designed 'courageous' leniency programs reward the first party that reports sufficient information with the fines paid by all other parties, and with finitely high fines achieve the first best 'Moderate' leniency programs that only reduce or cancel sanctions, as implemented in reality, may also destabilize and deter cartels by (a) protecting agents that defect (and report) from fines; (b) protecting them from other agents' punishment; and (c) increasing the riskiness of taking part to a cartel

Divide et Impera: Optimal Leniency Programs

The article presents a unique regression analysis of social-science estimates of the size of cartel overcharges. More than 800 overcharge rates were collected from a variety of published sources that have appeared in the literature during the last 125 years. A meta-analysis of overcharges from 395 cartel episodes finds that duration, legal environment, and organizational characteristics of cartels explain the variation on overcharge rates to a greater extent than the type of publication or the method of overcharge analysis. In particular, overcharges are significantly higher for durable international cartels and are declining as antitrust enforcement regimes have stiffened. Historical case studies and government reports calculate lower overcharges, whereas antitrust authorities arrive at relatively high rates.

Cartel Overcharges: Survey and Meta-Analysis

This paper aims to assess the influence that economic analysis has had on competition policy in the European Union over the last twenty years. Economists are increasingly used in antitrust cases; the annual turnover of the main economic consultancy firms has increased by a factor of 20 since the early 1990s and currently exceeds £20 million. This is about 15% of the aggregate fees earned on antitrust cases, a proportion close to that in the US. The economic resources mobilized by the EU Commission are, however, an order of magnitude smaller and this imbalance is a source of concern. The legal framework and the case decisions have also been influenced by economic analysis in important ways. For instance, the analysis of agreements between firms has increasingly focused on effects; the analysis of the factors that determine effective competition has become more sophisticated; the concept of collective dominance has been progressively developed in terms of the theory of collusion in repeated interactions, and quantitative methods have become more important. However, enforcement has sometimes appealed to economic reasoning in flawed or speculative ways; the paper discusses procedural reasons why this may have occurred. This paper assesses the system of evidence gathering implemented by the Commission in the light of the law and economics literature. It is concluded that while the reforms recently implemented by the Commission do address the main weaknesses of this system, they may still not allow for the most effective development of economic theory and evidence in actual cases.

— Damien J. Neven

/pdf/competition-economics-and-antitrust-in-europe-4tt4wvtx90.pdf

Competition economics and antitrust in Europe

Leniency programs contribute to destabilizing collusion but can also be abused and generate perverse effects. This paper develops a simple model capturing this trade-off, which we use to relate the optimal leniency policy (the carrot) to the effectiveness of investigations (the stick). We show that it is always desirable to offer some leniency before an investigation is launched; it is also optimal to offer some leniency once an investigation is underway when investigations are unlikely to succeed in uncovering cartels, absent self-reporting. Our analysis also confirms the usefulness of restricting leniency to the first informant only; in contrast, it does not support prohibiting leniency for repeat offenders.

/pdf/on-the-design-of-leniency-programs-51jpdh9l6h.pdf

On the Design of Leniency Programs

https://govinfo.library.unt.edu/amc/public_studies_fr28902/remedies_pdf/Connor050615.pdf

Cartel overcharges: survey and meta-analysis

New Frontiers of Antitrust

This paper deals with the powers of investigation of the European Commission and of the competition authorities of the Member States for the enforcement of Articles 81 and 82 EC, and with the…

Powers of investigation and procedural rights and guarantees in EU antitrust enforcement : The interplay between European and national legislation and case-law

This report, prepared for the 2004 FIDE Conference, consists of two parts. The first part gives an overview of the main content of Regulation No 1/2003, in its historic context. The second part…

Wouter P. J. Wils

Papers

New Frontiers of Antitrust

Powers of investigation and procedural rights and guarantees in EU antitrust enforcement : The interplay between European and national legislation and case-law

The reform of competition law enforcement brought about by Regulation N° 1/2003 : Will it work ?

Economic and Legal Implications of Criminal Competition Law Enforcement: Discussion by Panel

Economic and Legal Implications of Criminal Competition Law Enforcement: Discussion by Panel