Illegal Agreements Research Articles

CARTELS IN THE DIGITAL ERA: CHALLENGES AND OBSTACLES

Cartels agreements are contracted between market participants with the aim of hindering, restricting or distorting competition. The paper first provides a definition of cartel agreements and their categorization, with reference to the most common types of cartel agreements. The author elaborates on the price algorithm, as one of the most prevalent forms of competitors' collusion in the digital domain. Given that the digital age provides infinite opportunities for contracting illegal agreements and competition distortion, the author presents the challenges and obstacles enountered by national competition authorities in various countries, and describes how they established effective mechanisms to combat cartels. In particular, the author refers to the amended German Act against Restraints of Competition, by means of which Germany became the first country in Europe to introduce radical measures in the battle against technological giants, whose economic power frequently exceeds the power of states. Finally, the author underscores the need for the states to work together to combat digital cartels.

Criminal Responsibility for Human Trafficking or Another Illegal Agreement on Humans: Historical Aspects

Criminal Responsibility for Human Trafficking or Another Illegal Agreement on Humans: Historical Aspects

Time to remit the sins? Iranian cohabitation in the context of Shi’a fiqh

ABSTRACT In Iran, White Marriage refers to a couple's living together and having sexu-al relationship through an irreligious, illegal agreement. While Islamic Law considers it fornication, cohabitation is growing common in Tehran. This has brought to question whether Shi'a fiqh (Twelver jurisprudence) should adapt itself to this reality. To that end, we intend to undertake an examina-tion of cohabitation in Shi'a Islamic jurisprudence. We hold that to avoid further decline in relevance, Shi'a fiqh will have to define cohabitation in its intra-discourse terms in such forms as mu'ātāti (unspoken) religious vow, or new alternatives.

Особа як елемент криміналістичної характеристики доведення до банкрутства (ст. 219 Кримінального кодексу України).

У статті розглянуто поняття і сутність особи як еле-менту криміналістичної характеристики криміналь-ного правопорушення доведення до банкрутства. На підставі аналізу статистичних даних, слідчої та судової практики виокремлено ознаки фізичних осіб, які вчиняють цей вид правопорушення, та обґрунтова-на доцільність розширення кола суб’єктів, шляхом включення юридичних осіб. Цей підхід зумовлений випадками рейдерського захоплення активів підпри-ємств, які призводять до стійкої фінансової неспро-можності. Наявні методики розслідування доведення до банкрутства не містять рекомендацій правоохорон-ним органам з цього питання. Злочинці намагаються створити видимість здійснення законної діяльності, заздалегідь продумують способи вчинення дій, ске-рованих на доведення до банкрутства, визначають поетапність укладання заздалегідь невигідних угод, здійснення фінансово-господарських операцій, забез-печують конфіденційність домовленостей з іншими суб’єктами – юридичними особами та фізичними осо-бами. Очевидно, що для реалізації вказаних дій залу-чаються «білокомірцеві» особи: 1) керівники підпри-ємств (генеральні директори, директори, заступники); 2) керівники та/або члени наглядових рад; 3) головні бухгалтери, фінансисти, керівники планових відділів; 4) юристи, адвокати; 5) охоронні агентства; 6) посадові особи державних органів, які видають ліцензії та вико-нують інші дозвільні та контрольні функції.Автор наводить види юридичних осіб, які залуча-ються до злочинних дій або на користь яких скерова-ні неправомірні угоди, підробка документів, зловжи-вання службовим становищем. Юридичні особи як суб’єкти доведення до банкрутства можуть бути таких видів: 1) за ознакою заснування: засновником є керів-ник підприємства, яке збанкрутувало; засновником є близькі родичі, члени сім’ї керівника підприєм-ства; засновником є підставні особи, які фактично не керують підприємством, а виконують прямі вказів-ки; засновником є злочинна організована група (осо-би, які мають судимості, тощо); 2) за видом діяльності (сферою, видом економічної діяльності): має тотожний вид економічної діяльності та виробництва; має інший вид діяльності, але пов’язаний з діяльністю підприєм-ства-банкрута (постачання тари, сировини, надання транспортних послуг тощо); юридична особа не має жодних виробничих зв’язків; 3) за строком існуван-ня: створена та має тривалу виробничу діяльність; час створення незначний (передує активним діям щодо доведення іншої юридичної особи до банкрутства); 4) за персональним складом керівництва: особа, яка має досвід у сфері діяльності підприємства, яке доводиться до неспроможності; особа, яка не має досвіду у сфері ді-яльності підприємства, яке доводиться до неспромож-ності; керівником підприємства є особа, яка є давнім партнером у ділових стосунках з керівником підпри-ємства-банкрута; керівником підприємства є один із засновників підприємства, що доводиться до банкрут-ства, який вийшов зі складу його засновників у ре-зультаті конфлікту з іншими (помста, намагання за-брати частку свого капіталу); 5) за характеристикою наслідків керування такою особою підприємствами: попередній досвід позитивний (в результаті погли-нання підприємств створена ефективна корпорація); попередній досвід негативний (всі юридичні особи, якими керувала ця уповноважена особа, закривалися), що свідчить про фіктивність з наміром у неправомір-ний спосіб заволодіти активами.

THE IMPORTANCE OF CRIMINAL CHARACTERISTICS FOR THE FORMATION OF METHODS OF INVESTIGATION OF HUMAN TRAFFICKING

The article analyzes the main modern approaches to understanding the essence of forensic characterization of criminal offenses, shows its role as an important element of the methodology of investigating child trafficking or other illegal agreement on a child. Emphasis is placed on the complex nature of the methodology of investigation of such crimes, as its close relationship is obvious with both specific (criminal offenses against the will, honor and dignity of the person, morality) and subspecies methods of investigation (child exploitation, begging, pornography) and the investigation methodology. crimes committed by organized groups. The specific nature of this technique is manifested in the fact that it accumulates both general recommendations presented in the species methods, and specific recommendations that take into account the peculiarities of the investigation of such acts. The scientific basis of a comprehensive forensic methodology for investigating child trafficking or other illegal agreement on a child under the new criminal procedure legislation has been developed, its place in the system of species (intraspecific) and non-species methods has been determined, as well as the structure of forensic characteristics. committing and concealing crimes; the situation of the commission and the trace picture; information on the perpetrators, criminal groups and the identity of the child victim (s).

Duke must end ‘no poach’ agreement

The US Department of Justice has intervened in a lawsuit to prevent two North Carolina universities from engaging in anticompetitive behavior in faculty hiring. Under a proposed settlement agreement, Duke University will drop a “no poach” agreement with the University of North Carolina that prevented competition over medical school faculty. A 2015 lawsuit filed against Duke by radiologist Danielle Seaman, then an assistant professor at the Duke University School of Medicine, alleged that an illegal agreement between the schools kept salaries low and stopped faculty from moving. Her lawsuit was later expanded into a class action representing all faculty at both Duke and UNC medical schools. The settlement prohibits Duke from entering into any noncompetitive agreement for 5 years, and the school must implement a system to prevent any anticompetitive behavior going forward. If the judge grants the Justice Department the right to intervene, then the department will be allowed

Algorithms as Illegal Agreements

Despite the increased transparency, connectivity, and search abilities that characterize the digital marketplace, the digital revolution has not always yielded the bargain prices that many consumers expected. What is going on? Some researchers suggest that one factor may be coordination between the algorithms used by suppliers to determine trade terms. Simple coordination-facilitating algorithms are already available off the shelf, and such coordination is only likely to become more commonplace in the near future. This is not surprising. If algorithms offer a legal way to overcome obstacles to profit-boosting coordination, and create a jointly profitable status quo in the market, why should suppliers not use them? In light of these developments, seeking solutions – both regulatory and market-driven – is timely and essential. While current research has largely focused on the concerns raised by algorithmic-facilitated coordination, this article takes the next step, asking to what extent current laws can be fitted to effectively deal with this phenomenon. To meet this challenge, this article advances in three stages. The first part analyzes the effects of algorithms on the ability of competitors to coordinate their conduct. While this issue has been addressed by other researchers, this article seeks to contribute to the analysis by systematically charting the technological abilities of algorithms that may affect coordination in the digital ecosystem in which they operate. Special emphasis is placed on the fact that the algorithms is a “recipe for action”, which can be directly or indirectly observed by competitors. The second part explores the promises as well as the limits of market solutions. In particular, it considers the use of algorithms by consumers and off-the-grid transactions to counteract some of the effects of algorithmic-facilitated coordination by suppliers. The shortcomings of such market solutions lead to the third part, which focuses on the ability of existing legal tools to deal effectively with algorithmic-facilitated coordination, while not harming the efficiencies they bring about. The analysis explores three interconnected questions that stand at the basis of designing a welfare-enhancing policy: What exactly do we wish to prohibit, and can we spell this out clearly for market participants? What types of conduct are captured under the existing antitrust laws? And is there justification for widening the regulatory net beyond its current prohibitions in light of the changing nature of the marketplace? In particular, the article explores the application of the concepts of plus factors and facilitating practices to algorithms. The analysis refutes the Federal Trade Commission’s acting Chairwoman’s claim that current laws are sufficient to deal with algorithmic-facilitated coordination.

Balcão único para os 'primeiros a tocar o sino' em acordos globais de leniência

Neste trabalho, assumindo os benefícios sociais relativos à defesa da concorrência, serão inicialmente expostos os problemas causados pela conduta de acordos ilegais entre “concorrentes” de mercado (cartéis). Em consequência dessa conduta socialmente indesejada, o tratamento destinado por diferentes países em programas de leniência será apresentado, incluindo-se, nesses programas, uma solução que vem ganhando força no combate aos cartéis mundo afora: a senha para o primeiro denunciante. Mais à frente, após a explicação da lógica que, na elaboração desses acordos de anistia, há por trás da leniência, o presente estudo cuidará de seu problema fundamental, ou seja, o excesso de jurisdições para acordos de leniência – que, em âmbito mundial, gera ineficiências ao sistema de defesa da concorrência. Como uma possível solução para esse excesso de jurisdições cuidando dos mesmos acordos, esta pesquisa abordará a proposta de um “balcão único para os primeiros a tocar o sino”, ou seja, a sugestão de se criar um sistema global de distribuição de senhas unificadas para acordos de leniência que, porventura, envolvam diversos países.

How Horizontal Shareholding Harms Our Economy - And Why Antitrust Law Can Fix It

Empirical evidence that horizontal shareholding has created anticompetitive effects in airline and banking markets have produced calls for antitrust enforcement. In response, others have critiqued the airline and banking studies and argued that antitrust law cannot tackle any anticompetitive effects from horizontal shareholding. I show that new economic proofs and empirical evidence, ranging far beyond the airline and banking studies, show that horizontal shareholding in concentrated markets often has anticompetitive effects. I also provide new analysis demonstrating that critiques of the airline and banking market-level studies either conflict with the evidence or, when taken into account, increase the estimated adverse price effects from horizontal shareholding. Finally, I provide new legal theories for tackling the problem of horizontal shareholding. I show that when horizontal shareholding has anticompetitive effects, it is illegal not only under Clayton Act §7, but also under Sherman Act §1. In fact, the historic trusts that were the core target of antitrust law were horizontal shareholders. I further show that anticompetitive horizontal shareholding also constitutes an illegal agreement or concerted practice under EU Treaty Article 101, as well as an abuse of collective dominance under Article 102. I conclude by showing that horizontal shareholding not only lessens the market concentration that traditional merger law can tolerate, but also means that what otherwise seem like non-horizontal mergers should often be treated as horizontal. Those implications for traditional merger analysis become even stronger if we fail to tackle horizontal shareholding directly.

Business cartels and organised crime: exclusive and inclusive systems of collusion

In this article, two case studies of large-scale bid rigging in the construction industry in Canada and the Netherlands are analysed to explore why business cartels sometimes do and sometimes do not involve organised crime. By combining concepts from both organised crime and organisational crime, an integrated understanding of the organisation of serious crimes for gain is applied. Across time and space, businesses in the construction industry are known to fix prices, use collusive tendering and divide market shares in illegal cartel agreements. In order to stabilise cartels, participants need to ward off new competitors and prevent cheating within the cartel. The question why we see a system of collusion involving organised crime and violence in Canada as opposed to the Netherlands is answered through analysing two comparable cases. This article finds two systems of bid rigging emerge under different cultural conditions: inclusive and exclusive collusion. The exclusive system makes use of the violent reputation provided by criminal groups and distinguishes from the inclusive system that uses sophisticated administration of mutual claims in shadow bookkeeping.

New Evidence, Proofs, and Legal Theories on Horizontal Shareholding

This Article shows that new economic proofs and empirical evidence provide powerful confirmation that, even when horizontal shareholders individually have minority stakes, horizontal shareholding in concentrated markets often has anticompetitive effects. The new economic proofs show that, without any need for coordination or communication, horizontal shareholding will cause corporate managers to lessen competition to the extent they care about their vote share or re-election odds and will cause executive compensation to be based less on firm performance and more on industry performance. The new empirical evidence consists of cross-industry studies which confirm that, just as the proofs predict, increased horizontal shareholding increases the distortion of executive compensation and the gap between corporate profits and investment. I also provide new analysis demonstrating that critiques of earlier empirical studies showing adverse price effects for airlines and banking are generally invalid and that addressing the valid subset of those critiques actually increases the estimated price effects. I further demonstrate that the various excuses for delaying enforcement action are meritless. Finally, I provide new legal theories for tackling the problem of horizontal shareholding. I show that when horizontal shareholding has anticompetitive effects, it is illegal not only under Clayton Act §7, but also under Sherman Act §1. In fact, the historic trusts that were the core target of antitrust law were horizontal shareholders. I further show that anticompetitive horizontal shareholding also constitutes an illegal agreement or concerted practice under EU Treaty Article 101, as well as an abuse of collective dominance under Article 102.

Competition policy and its importance for the economy

The article analyzes and discusses topics such as competitition and it’s importance for markets. Competition is a cornerstone of our economic and social order. The fact that competition leads to the best overall economic results is now undisputed in most economies around the world. Effective competition encourages businesses to push forward. They must make an effort to win customers. As a consequence, consumers can benefit directly from better quality at lower prices. Competition Agencies increased the effectiveness of their cartel prosecution efforts, for example by establishing specialized anti-cartel divisions, revising their leniency programme and lauchinannonymous whistle-blowing system. High-level fines can only gave a deterrent effect if the cartel members have reason to expect that their cartel activities will be uncovered. The leniency programme as one of the sources available for uncovering anti-competitive agreements this also has a strong deterrent effect. Cartel members must expect at all time that one of them might have reported the illegal agreements to the competition authorities. The prosecution of illegal hardcore cartels [1] is of key relevance for effective competition protection and, as such, has a direct positive effect in the economy and costumers. Cartels cause great harm to the economy because they lead to higher prices, lower product quality and less innovation. This harm can only be prevented if cartels are effectively prosecuted. Also, anti-competitive agreements lead to excessive prices coupled with inferior product quality. At the same time the elimination of competition undermines the innovative power of businesses.Cartels thus hurt the economy as a whole and the consumer in particular. The motivation to study competition policy and its importance for economy is step to introduce more economic possibilities and partnerships in our developing world.

Immoral Promises

When are illicit promises morally binding? Although sundry moral philosophers and legal scholars have offered a wide variety of theories to explain why and when promises are morally binding, there is a significant blind spot in this conversation, for few theorists have given sustained attention to the problem of illegal and immoral promises. Even Charles Fried, for example, makes no mention of illegal or immoral agreements in his classic work Contract as Promise. This Article thus explores the law and ethics of illicit promises--defined broadly as promises to perform illegal or immoral acts. After presenting several motivating examples to illustrate the problem of illicit promises, such as promises to join criminal partnerships, promises to repay usurious loans, and promises to obstruct justice, the Article presents a fourfold classification of illicit promises and then explores the inner logic of such promises in light of existing theories of promises. This Article then proposes a framework inspired by the common law and applies this new framework to the examples introduced earlier in the paper. The Article also explains how this common law framework sheds new light on old contract doctrines such as fraud in the inducement and duress. (An Appendix contains several examples of illicit promises.)

Brief for Antitrust Law Professors as Amici Curiae in Support of Petitioners - Visa Inc. V. Osborn

The courts of appeals are divided over whether a plaintiff can plausibly plead a horizontal conspiracy among competitors in violation of section 1 of the Sherman Act merely by alleging that members of a business association: (a) have governance rights in the association and (b) agreed to adhere to its rules. Amici submit that the D.C. Circuit erred in holding here that such allegations are sufficient. That holding is inconsistent with this Court’s precedent requiring plaintiffs, in order to allege an illegal agreement, to plead facts plausibly suggesting collusion among the defendants to achieve a common unlawful objective. The approach approved by the decision below would mean that every business that participates in the affairs of a business association can be subjected to expensive discovery concerning an allegedly anticompetitive rule of the association. That would discourage beneficial business-association activities, to the detriment of businesses and consumers alike.

Objective and Subjective Theories of Concerted Action

Communication is useful and often necessary for rivals to coordinate price and output decisions. All would agree that evidence of communication on these issues is relevant to the issue of whether firms reached an illegal agreement or engaged in concerted action in violation of Section 1 of the Sherman Act. Most courts and commentators would go further and define agreement and concerted action to require communication of one kind or another. I call this view the objective theory of concerted action. Louis Kaplow has recently challenged this approach in three important articles, all of which argue that the focus on communications is misguided. Although he does not propose a fully specified definition, he suggests that a standard of successful oligopolistic interdependence -- in which rivals reach a meeting of the minds -- would provide a superior basis for identifying unlawful agreements. In this essay, I describe this subjective theory of concerted action and identify the equilibria that it includes and excludes. I then consider its likely costs and benefits relative to the current objective theory. I argue that it will deter few durable instances of oligopolistic interdependence that present law would not prohibit. On the other hand, it apparently immunizes some equilibria, even if reached through communication. If so, it would raise the possibility of new and problematic defenses to claims of illegal concerted action. Moreover, Kaplow excludes certain noncompetitive equilibria from the subjective standard on the ground that they do not involve the requisite meeting of minds. But these equilibria differ in only a few ways from other, strategic equilibria that arguably do involve the necessary meeting of minds. Reliance on the concept of a meeting of the minds to distinguish these equilibria would risk significant false positives.

Collusive Shrouding and Cartelization

We investigate the impact of consumer myopia on competition and firm behavior. In our model, firms repeatedly sell a primary good and a respective add-on. We study the impact of consumer myopia in the add-on market on pricing and on the ability of firms to engage in collusion. We show that in a situation in which firms cartelize and charge monopoly prices, limited attention makes deviation from such collusive behavior less rewarding and hence facilitates collusion. In particular, we determine the incentives of firms to educate consumers. We find that a shrouded market in which no firm educates consumers is a sign for cartelization. Hence, if obfuscation is observed in a market, it can serve as a proxy signal for illegal industry agreements.

Anti-Competitive Agreements: The Meaning of 'Agreement'

In the classic cartel, supposed competitors meet in the proverbial smoke-filled hotel room and agree to fix prices at supra-competitive levels. Even though the “agreement” is unlikely to be legally binding on the parties (i.e., the agreement could not be enforced against one of the cartelists that began to “cheat” by offering lower prices), virtually all modern economies would treat such a cartel as unlawful under their national antitrust laws.Despite the effectiveness of leniency programs in encouraging confessions from cartel members, there are still cartels (both domestic and international) that operate under a cloak of secrecy, and therefore governments must continue to use more conventional tools to seek them out and prosecute them. Sometimes these traditional investigatory tools will yield the confession or the hot documents that will make prosecution easy, but not always. So the question arises: in the absence of a video-taped cartel meeting, a cooperating participant, or incriminating documents, can a cartel be successfully prosecuted based primarily on “circumstantial” evidence? However, it is not just a question of what kind of circumstantial evidence can be used to establish the existence of a hard-core cartel – that question might best be described in these circumstances as akin to an economic detective story. A more complicated substantive question underlies the effort to describe the type and quantity of the circumstantial evidence necessary to obtain a successful prosecution, namely, what precisely do we mean to include under the category of an illegal “agreement” or “conspiracy” or “concerted practice?” The plan of this chapter is to begin by describing how the U.S. treats classic cartel behavior when proof of the existence of a cartel agreement is not an issue. Then we turn to the task of establishing the existence of an illegal agreement primarily or entirely through circumstantial evidence. This will quickly get us into the question of what constitutes an unlawful agreement under U.S. law and in particular, the recently renewed debate about whether classic oligopoly behavior can be prosecuted as an unlawful agreement. In the process, we will refer to how similar issues are dealt with in other jurisdictions, most notably the European Union.

Should the E-Book Case Presage the Decline of the Per Se and Market Share Doctrines

The U.S. Department of Justice, Antitrust Division (Division or DOJ), has filed a high profile case against Apple and several large book publishers (Complaint). The case alleges that the defendants agreed to change the way e-books were sold. Publishers generally follow the wholesale model, selling books outright — both “e” and traditional — to booksellers who then set retail prices. The challenged agreement allegedly required the publishers to switch to an agency model for e-books. Pursuant to this model, each publisher would set the resale price and pay a thirty percent commission to the retailer. The Division alleges that the publishers made these changes because they feared that lower prices for e-books would lead to “lower prices for print books.” Amazon had set a $9.99 retail price for popular e-books, which the Division alleged was “substantially lower than hardcover versions of the same title.” The publisher defendants were concerned these lower e-book prices would lead to the “‘deflation’ of hardcover book prices.” In addition to price competition, the Complaint maintains that traditional publishers were concerned that e-book-only publishers could effectively steer consumers away from print books, thus devaluing investments in manufacturing and distribution assets that the legacy publishers had made to support their print businesses. Although the DOJ contends that Apple’s agreement with the publishers is a naked agreement to fix prices and thus illegal per se, the government hedges its bets. Much of the complaint reads as if the government were alleging a rule-of-reason case, articulating actual anticompetitive effects in an e-book relevant product market of which the publisher defendants possess a large share. Whether viewed as a per se or rule-of-reason case, however, the Complaint convincingly tells the story of traditional publishers scheming to increase consumer prices and restrain competition from upstart e-book publishers. That three publisher defendants agreed to abandon the agreement and submit to the on-going, intrusive government scrutiny that comes with a consent decree confirms the case’s strength. Yet a sophisticated, doctrinally focused antitrust lawyer would have no trouble attacking (1) the applicability of the per se rule and (2) the contention that e-books form a separate product market and thus do not compete directly with traditional books. The alleged agreement does not, on its face, appear to almost always harm consumer interests, as per se illegal agreements must. An agency distribution scheme could, for example, pro-competitively facilitate an industry introducing a new product into an established market. Market definition is often a critical factor in antitrust cases because practices that harm consumers in a narrow market may have an insignificant impact in a broader market. The choice to define the market as “e-books only” is consistent with the Division’s claim that practices only affecting e-books can harm consumers. Many consumers, however, readily substitute traditional books for e-books, and the Division’s anticompetitive story is motivated by e-books’ competitive impact on ordinary book sales. From a doctrinal perspective, defining the market as limited to e-books-only seems too narrow.That these points are debatable should not suggest that the government’s case is weak. But the litigating defendants will spill plenty of ink nonetheless. Already, Apple’s answer denies the existence of an e-book-only product market and attacks the complaint for ignoring that the agency model enabled robust competition by breaking up Amazon’s dominant position. Could skillful lawyering bamboozle a judge with limited antitrust chops? Perhaps the time has come to ask whether the per se rule and traditional market definition doctrine have become more trouble than they are worth.Part I reviews the allegations in the complaint with respect to per se liability and market definition. Part II shows how a relentlessly doctrinal approach to criticizing the Division’s per se and relevant market allegations could distort the antitrust analysis. Part III explains that these criticisms do not undermine the case in any meaningful sense — they simply create the opportunity for distracting doctrinal posturing. This Part then raises the question: If traditional doctrine has lost its ability to simplify antitrust cases, do these hoary tools serve any useful purpose?

Funkcjonowanie wybranych rynków oligopolistycznych w Polsce w aspekcie działań Urzędu Ochrony Konkurencji i Konsumentów

The profile of some was introduced in the present article, discordant with the right workings, chosen enterprises act on Polish oligopolic markets the which became detects thanks to supervisory workings Office of Fair Trading (UOKiK). The cartel collusions which have the place on various, Polish oligopolic markets predominate the various kind in the objective catalogue of described delicts. Illegal agreements can concern the inflated price not only, but also the different elements of marketing mix tj. the product, distribution, if the promotion. The consumer from these cases, on the wasted position stands up in every one or /and competitive enterprises which are not the participants of this agreement. That is why proper workings subjects entitled to monitors, finds and limits practician monopolistic he is the key element of the existence of the free market. Last years show that the workings of UOKiK reconcile in the businesses of the dishonest businessmen who in the discordant way with the right desire to maximalize of one’s profits more and more painfully.

The Effects of Ringleader Discrimination on Cartel Stability and Deterrence – Experimental Insights

Cartel ringleaders make significant contributions to enabling illegal collusive agreements to function. According to US legislation, ringleaders are excluded from corporate leniency programs. Since 2002, under EU regulations, ringleaders may qualify for a reduction of fines. To date, both antitrust laws treat cartel ringleaders differently. We analyze the impact of this difference in a cartel experiment. Given a low probability of detection through an authority, we find that excluding ringleaders from leniency facilitates cartel formation, stabilizes collusion and leads to significantly higher market prices. The opposite holds for a high probability of detection. Here, the results are in line with the situation when every player can apply for leniency.