The Leniency Programme in Taiwan

Over the last few decades, leniency programs recorded a successful history of identifying and dismantling cartels. The essential idea is simple, that authorities will reward a cartel member who self-reports. It is instructive to consider why authorities have relied so heavily on leniency in the past. First, it is not particularly resource intensive to implement. It doesn’t require collecting large amounts of data and employing economists and data analysts to sift through the haystack in hopes of finding the occasional needle. Second, almost by definition leniency is likely to have a high success rate of prosecution, among those applications selected to be fully investigated. It is noteworthy though that authorities are reluctant to produce statistics on the overall efficacy of their leniency programs. We should have a better idea of how many leniency applications are reviewed and investigated (among all those filed), and of those, how many lead nowhere. But we are not privy to such valuable information. Can authorities continue to almost exclusively depend on leniency programs going forward? There is no other area of criminal investigation which essentially waits for the guilty to confess as its key detection tool, yet the advantages of resource and success of such “passive detection” would equally apply to robbery or homicide: it doesn’t cost much to wait for a confession, and if someone confesses, the case will almost certainly be closed successfully. But while the police surveil neighborhoods to monitor possible illegal conduct, ready to not only detect ongoing conduct but also hopefully to deter such conduct from even getting started, several competition authorities still tend to lack the proactive nature of detection and deterrence through screening or market monitoring, relying (almost or entirely) on leniency programs. Hence, cartel detection appears, at least at first, to be a uniquely passive area of law enforcement. In this short paper we explore the role of leniency programs in the next generation of cartel detection, and ultimately deterrence. Will it continue to be the dominant source of cartel detection, or will advances in data collection and analysis – so-called “big data” and “machine learning” – reduce the cost and increase the effectiveness of screening and artificial intelligence techniques? Will traditional leniency and whistleblower programs even remain effective in a future which may keep no “paper trail” of communications proving the necessary intent? Have we learned the lessons from extensive rigging in financial markets? Do we need to revisit the entire detection approach?

Recent laboratory experiments support the popular view that the introduction of corporate leniency programs has significantly decreased cartel activity. We develop a classroom experiment that captures key features of leniency programs. Our treatments include an exploitable and a non-exploitable leniency program to highlight possible adverse effects of leniency programs that are too generous. We also examine to what extent a non-exploitable leniency program triggers tacit collusion. The experimental results show that if the efforts of the antitrust authority and the leniency program are directed exclusively to the most straightforward collusive scheme, subjects manage to switch to a more intricate form of coordination. This shift from overt collusion to tacit collusion can serve as the basis for a classroom discussion about the effectiveness of actual leniency programs.

The concept of "leniency" in competition law, or better known as the "leniency programme", has proven to be an extremely important instrument in fighting unfair competition. In the Republic of Northern Macedonia (hereinafter RNM), this concept of suppressing or reducing unfair competition, more or less, exists solely as a law conception. Nowadays, when the EU discusses the impact of the global crisis and the Coronavirus pandemic on the level of utilization of ”leniency programme", this concept is still unknown or not a well-known concept for business sector in RNM. The main focus of this article is “leniency programme” in RNM. The key questions that we aim to answer here, are: whether and to what extent this instrument is predicted in Macedonian competition law? Is it predicted only as a law category, or it has practical implications too? Although this research refers to RNM, we strongly believe that a thorough study of “leniency” requires exploration of European conception of “leniency” too. For that purpose, we use relevant EU legislation, as well as practice. Thus, our main goal is to consider the position of RNM towards “leniency” and bring into relation to the Macedonian competition law. We base our hypothetical framework on the assumption that the applicability of “leniency programme” in RNM is at the lowest level. Furthermore, that the undertakings are not interested in applying “leniency”. This situation is partly due to the lack of information, the complexity of the application procedure, as well as other factors that are related not only to the attitude of the executive of undertakings, but more to the general economic circumstances, economic development, the market size of goods and services, etc. Using the analytical-descriptive method, the comparative method, and the method of analysis and synthesis, we’ll elaborate the situation in RNM regarding this issue, and we will present our views considering the questions: whether certain measures should be taken regarding „leniency program“, and what should be done to boost the use of this program in the Macedonian business sector.

The US introduced the cartel leniency program in 1978. In the past two decades, there has been a surge in the implementation of leniency programs in more than sixty jurisdictions. Although there have been numerous scholarly discussions to support the cartel leniency program, inconsistent views exist among different jurisdictions and stakeholders as to the effectiveness of the leniency program in practice. In evaluating new leniency programs, scholars and commentators have typically referred to the US and the EU models as benchmarks, but little attention has been paid to the question of whether it is desirable to apply these models in designing various leniency programs in different jurisdictions and societies. Given that Australia has recently revised its cartel immunity program for the third time, and that China’s competition authorities have proactively relied on the leniency concept to combat cartels in the past few years and are currently drafting a guideline for more effective implementation of the cartel leniency program, the time is now ripe for an apple-versus-pear comparison of these two immunity/leniency programs so as to provide more insights into the different institutional designs of immunity/leniency programs.

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.

Leniency under the Japanese Antimonopoly Law (AML) is claimed to have been a success. Toshiyuki Nambu, an official of the Japan Fair Trade Commission (JFTC) writing in his personal capacity, recently expressed this opinion in an article with the telling title ‘A Successful Story: Leniency and (International) Cartel Enforcement in Japan’. Nambu’s assessment is in line with those expressed by several early observers of the leniency programme. Former Chairman of the JFTC, Kazuhiko Takeshima claimed ‘that the leniency programme has produced significant results since its introduction.’ And an international firm of solicitors has similarly claimed that with leniency ‘the JFTC now has teeth’. Akinori Uesugi, formulating his observations one year after the leniency programme went into effect in 2006, gave direction for drawing such conclusions. The leniency programme, he observed, had triggered high number of leniency applications, giving way to a smooth decision making process by the JFTC. The number of leniency applications and the process of decision-making tell a partial story only, and they are insufficient measures for assessing the success or otherwise of a leniency programme. A leniency programme is an enforcement tool, aimed at facilitating both deterrence and detection of cartels. To appreciate fully the effectiveness of a leniency programme, and to assess any overarching policy on cartel deterrence and detection, more information is required. While acknowledging the high rate of leniency applications in Japan and the possible conclusions that can be drawn from it, this chapter draws on additional data, including the nature of the firms applying for leniency, the nature of the cartels detected through leniency and the extent to which leniency applications are followed by infringement decisions by the JFTC. Based upon this data, the chapter offers a more rigorous and complete assessment of the effectiveness of the Japanese leniency programme to date.

The leniency program is a pardon mechanism that allows cartel members to complain to the business competition authorities about cartel operations and receive partial or whole exemption from the penalties and/or fines that should be imposed. In Japan, the Leniency Program is in use. This article's formulation of the problem is how to create a leniency program in Japan based on the Antimonopoly Act and what are the chances of doing so to expose cartels in Indonesia's competition law system. This article offers a normative legal analysis of Indonesia's prospective use of leniency schemes in cartel proceedings. The research is descriptive-analytical in character, and data collecting through literature reviews and interviews, whereas data processing is qualitative. The findings of the research and debate indicate that it is highly likely that Indonesia will implement the leniency program by enacting the bill as the new Business Competition Law. The research's finding is that the leniency program is likely to be implemented in Indonesia by passing the bill as the country's new Business Competition Law because it is comprehensively implemented in Japan, from reporting procedures to sentencing reductions. It is suggested that Law No. 5/1999, whose provisions include a leniency program system, be amended, and that the KPPU then work with the LPSK to offer protection for reporters in the leniency program system.

Leniency programs have become one of important tools in cartel enforcement. In recent years there has been a decrease in leniency applications, and growth of the applications, under current leniency programs based on Prisoner's Dilemma, is limited unless an institutional circumstance about the programs is changed. I suggest revising leniency programs by improving the coordination problem among cartel participants in order to stimulate the incentive of cartel participants to report collusion where no application is made. I suggest a leniency program with a minimum-evidence standard (i) giving applicants rewards funded by the fines paid by cartel participants that do not report collusion, and (ii) selecting candidates for immunity according to the order of application and reducing fines of candidates that provide evidence above a minimum-evidence standard.

Leniency programs have become widespread and are generally quite active as reflected in the number of applications. What is not well-understood is how they affect the number of cartels. This paper develops and explores a theoretical framework to help understand when leniency programs are likely to be effective in reducing the presence of cartels. Plausible conditions are derived whereby a leniency program can result in more cartels. On a more positive note, we identify situations and policies that a competition authority can pursue that will make it more likely that a leniency program will have the intended effect of reducing the number of cartels.

The paper explores the interdependencies between corporate and individual leniency programs. In a duopoly model where corporations are separated into representing owners and operating managers, conflicts between the two types of agents arise if the relative benefits of participating in the corresponding leniency programs differ. As an example of what might cause differing relative benefits, the paper considers the inclusion of damage payments for owners which are not covered by the corporate leniency program. The main findings are: (1) Individual leniency applications are never observed. (2) Threats by managers to apply for individual leniency may, however, increase the owners' incentive to carry out corporate self-reports. (3) In other cases, the individual leniency program increases the owners' tolerance for cartel activity for two reasons: Either the corporate leniency program is sufficiently unattractive to the owners, or the owners rely on the option to apply for corporate leniency after the Antitrust Authority has opened a case. (4) Finally, the more distortion decreases, the more ineffective the individual leniency program becomes.

In response to cartel formation, competition lawyers and policymakers in nine Asian jurisdictions have experimented with leniency programmes. This mechanism allows firms to come forward with information in relation to their illegal cartel participation in return for a reduction of or immunity from a sanction. The experimentation plays out across three different dimensions: the revision of early adopted leniency programmes, the introduction of newly written leniency programmes, and the decision – deliberate or otherwise – not to create a leniency programme. This volume is the first to analyse the empirical evidence across a number of countries to determine how effective these measures have been, and how they have been amended in response to problems encountered. In this volume, local experts from key Asian jurisdictions, together with international experts, offer an introduction to this fast-developing field, and explore the theoretical, international and regulatory contexts of leniency programmes.

The European Commission has in recent years initiated an effort to facilitate private actions for damages in cartel cases. This paper demonstrates in a stylized game-theoretic framework that an increase in antitrust damages can be pro-collusive when a leniency program is already in place. The result holds true even if antitrust authorities are allowed to re-shape their leniency program in reaction to the higher damage level. Larger damage payments imply lower incentives to self-report if damages are not fully encompassed by the leniency program; in effect, the program has to be more generous to enforce self-reporting. But if antitrust authorities are not allowed to offer cash rewards to whistle-blowers, the sufficient level of generosity might be unattainable.

Leniency programs have become widespread and are generally quite active as reflected in the number of applications. What is not well understood is how they affect the number of cartels. This paper develops and explores a theoretical framework to help understand when leniency programs are likely to be effective in reducing the presence of cartels. Plausible conditions are derived whereby a leniency program can result in more cartels. On a more positive note, we identify situations and policies that a competition authority can pursue that will make it more likely that a leniency program will have the intended effect of reducing the number of cartels.

This study investigates the effects of leniency programs on cartel duration, cartel fines, and the length of investigations, providing empirical insights that contribute to the ongoing debate regarding their theoretical and empirical implications. The introduction of leniency programs in two different jurisdictions (EU and Spain) at different times and the exogeneity of the introduction date enable us to identify their impact using difference-in-differences estimations. We empirically show that leniency programs, by destabilizing existing cartels, allow for the detection of the longer-lasting ones in the short run. In the long run, our results suggest that destabilization effects prevail, and leniency programs discourage the creation of new cartels. Specifically, our findings indicate that the duration of detected cartels almost doubles in the short run and nearly halves in the long run. Finally, our study reveals that the introduction of leniency programs results in a significant increase in the average fines per cartel case, both before and after taking into account the fine reductions resulting from these programs. This suggests that leniency programs contribute to stronger sanctions against cartels, enhancing their general deterrent effect. However, our findings also indicate that leniency programs lengthen the average duration of cartel investigations, which may hinder the ability of competition authorities to proactively pursue other cases.

This study aims to implement the Leniency Programme in Indonesia and assist the Business Competition Supervisory Commission as a consideration in seeking the concept of Leniency Programme if regulations regarding the Leniency Programme in Indonesia already exist. The Leniency Programme is a program to provide cartelists who dare to divulge the cartels they participate in. The reduction of the sentence can be in the form of a full amnesty and a reduction in fines. The research method used is a qualitative method with normative empirical law research and comparative law. The data search technique is through library research and interviews with the Head of the Legal Bureau of the Competition Commission in Indonesia. In this research, technique is used in content analysis. The scope of this research is done by means of comparative law. This study compares Law no. 5 of 1999 with the India Competition Act 2002 regarding the differences in the evidence of cartel practice in Indonesia carried out by the Business Competition Supervisory Commission and as in India, the Competition Commission of India (CCI) whose task is to eradicate cartel practice. The results of this study found that actually the Leniency Programme was already in the Bill of Law Number 5 of 1999, but the bill was removed from the Prolegnas. In addition, the concept of the Leniency Programme in India can be used as an example of its application in Indonesia because the business competition authorities in India and Indonesia have similarities in providing sanctions against cartels, namely administrative sanctions.