Abstract
ABSTRACT In an attempt to hide from the competition authorities colluding firms risk committing financial statement fraud and market abuse. When colluding managers set the conditions for their cartel the resulting increase in profitability and ability to pay outstanding debt enables the firms to attract more investors, get access to larger loans and at a lower interest rate. The natural reluctance to disclose the firm’s cartel participation creates financial reports with misleading content, increases the likelihood of insider dealing and the ability to attract more funds diverts needed capital from otherwise more eligible firms and will endanger the integrity and efficient functioning of the financial markets. The conclusion is that firms and individuals involved in cartel offences should be investigated for financial statement fraud and market abuse although when persons may be subject to criminal sanctions it will decrease the attractiveness for individuals to use the leniency framework.
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