LENIENCY AND COOPERATION PROGRAMS IN BRAZIL: AN EMPIRICAL ANALYSIS FROM 1994 TO 2014

Eduardo Pedral Sampaio Fiuza,Fernanda Mariana da Silva Lima,Lucia Helena Salgado

doi:10.1590/198055272325

Abstract

ABSTRACT Leniency and cooperation programs are considered important instruments to assist in the effectiveness of the antitrust policy and they are designed to attend the following purposes: in the short run to facilitate detection of cartels and in the long run to destabilize existing cartels and deter the appearance of new ones. This study aims to analyze empirically whether the Brazilian leniency program has been achieving these goals. To this end, it tests the hypotheses developed by Brenner (2009) to assess the effectiveness of the EU leniency program.

Highlights

Cartel is an explicit agreement between competitors to raise prices and/or divide markets, in order to realize profits equivalent to those in a monopoly
The empirical exercise aims to evaluate the efficiency of the leniency program by answering two questions: (i) Does the leniency program induce a higher level of revealed information about cartels, than the level achieved by traditional methods, and does it decrease the duration and cost of administrative procedures? (ii) Does the leniency program destabilize existing cartels and discourage the emergence of new cartels?
Evaluating the effectiveness of this instrument is a very important step to be taken to ensure the success of antitrust policy

Summary

Introduction

Cartel is an explicit agreement between competitors to raise prices and/or divide markets, in order to realize profits equivalent to those in a monopoly. In addition to the direct effect of reducing consumer welfare in the form of compulsory price increases, a cartel artificially limits competition between firms and create obstacles to innovation. They do so by discouraging dynamic competition in its production processes and the introduction of new and better products into the market. Cartel has been considered an infringement of the economic order per se in all countries that apply antitrust laws (MATTOS, 2003). The volume of trade affected by the sixteen largest cartel cases analyzed (one hundred and nineteen cases in total) exceeded the amount of fifty-five billion dollars worldwide, demonstrating the magnitude of cartel in billions of dollars annually

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Conclusion