Leniency Programs Research Articles

An Improvement of Leniency Programs Where There Exists the Coordination Problem

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.

The Comparative Analysis of Leniency Programs in Cartel Investigations in the United States and China: The Law and Practice

The Anti-Monopoly (Anti-Competition Law of the People's Republic of China (PRC) is a recent development of the state following the opening up and reform of the 1980s. The Anti-Monopoly Law of PRC learned many experiences from the western world, such as the United States and the European Union that have experienced more than a century. But the young Anti-Monopoly Law of PRC has a comparable status of stabling market and consumer protection with the legal regime of the European Union in which most principles are transplanted. On the other hand, the Chinese Anti-Monopoly Law has its own Chinese Characteristics, such as the adoption of abuse of administrative power to eliminate or restrict competition as a manifestation of state interference. While in areas of cartel agreement investigation and leniency programs, though there are quite many similarities with the Anti-Trust Law of the United States, the paper argued that being the behavior of cartel is not a criminal act and regarded as administrative misconduct, its deterrence effect is minimal that needs some revisions. Besides, the paper argued that some institutional arrangement warrants for Anti-monopoly acts protection and enforcement institutions.

Rebating Antitrust Fines to Encourage Private Damages Actions

To encourage private actions for damages in antitrust cases some jurisdictions subtract a fraction of the redress from the fine. We analyze the effectiveness of this policy. Such a rebate does not encourage settlement negotiations that would otherwise not occur. If, however, the parties settle without the rebate, the introduction of the reduction increases the settlement amount, yet at the price of reduced deterrence for those wrongdoers who are actually fined. Under a leniency program the rebate has no effect on the leniency applicant: she doesn't pay a fine that can be reduced. The overall effect of a fine reduction on deterrence is, therefore, negative.

CARTEL SETTLEMENT IN EUROPEAN UNION


 
 
 This article points out the first steps of the cartel settlement and Leniency Program in European Union and positive sides of the mentioned tool for the companies participating in the anticompetitive agreements. Cartel Settlement and Leniency Program played an enormous role for the market to be undistorted and free from any type of anticompetitive practices. It is also worth to mention that introducing of Settlement notice as well as Leniency Program played crucial role for Commission and as well for undertakings to find fastest way out from the anticompetitive practices to settle and protect free and undistorted competition on the market. Both tools are very beneficial and useful for competition and its further development.
 
 

Leniency Programs and Cartel Organization of Multiproduct Firms

AbstractWhen multi-product firms make simultaneous price-fixing agreements in different markets, they may compartmentalize these agreements by having different individuals manage them so as to avoid the contagion of antitrust authority investigations. Leniency programs can overcome this strategy but may also lead to procollusive effects for centralized firms. The introduction of US amnesty plus programs can have different competitive effects, and leniency programs may modify firms’ choice of internal structure.

The Dutch Leniency Programme Turns 18:

Eighteen years ago, the Dutch leniency programme was introduced. The success of the leniency programme is closely linked to the developments around damages claims and firms’ awareness of the impact of other forms of damages. This article looks at past developments in cartel enforcement policy, the impact of damages claims, and deterrent effect of the leniency programme on new and existing cartels and its impact on the number of cartel cases in the Netherlands. It seems that private damages claims are growing up fast, and may well outgrow their younger sibling in terms of their deterrent effect. Keywords: leniency; ACM; private damages; deterrence effect; whistle blower

Optimal Destabilization of Cartels

This paper introduces an oligopoly model that includes three actors: a cartel (comprising two or more firms that operate like one merged company), a group of competing fringe firms, and a welfare maximizing antitrust authority. The cartel is the Stackelberg quantity leader and the fringe firms are in Cournot competition with respect to the residual demand. The cartel is internally stable if none of its member firms finds it profitable to become a fringe firm. The antitrust authority can destabilize the cartel in the sense of making the cartel internally instable. To this end, the antitrust authority has three policy instruments at its disposal: its own effort, a fine for detected cartels, and a leniency program for cartel members that cooperate with the authority. Taking into account that the use of these instruments is not costless for society, a unique optimal antitrust policy is derived. The analysis reveals that both, the optimal force and mix of the antitrust authority's policy depend on market characteristics such as the efficiency of the authority's operations, the public respect for the rule of law, the ethical standards of the firms' managers, the market volume, and the number of firms operating on the market.

Osvrt na povrede konkurencije u japanskom pravu

Author in this paper analyses competition violations under the Antimonopoly Act in Japan. Legal definition of competition violations is presented in the first chapter of paper as follows: private monopolization, unreasonable restraint of trade, and unfair trade practices. The second part of the paper focuses on the procedural course of identifying competition violations and the role played by the Japanese Fair Trade Commission in this process. Finally, the importance of the leniency program is emphasized as one of the most effective means of preventing anticompetitive behaviours of market participants. Throughout the paper, the author points out that there are some differences between competition legal framework in Japan and the European Union. The inspiration for writing this paper is the author's desire to share his own experiences and knowledge, gained during a three-week study visit to Japan in direct work with employees of the JFTC and professors in the field of competition law, in order to acquaint the expert public in the Republic of Serbia with Japanese competition law. During the research, the author used sources from the official site of the JFTC, as well as other relevant articles on the Internet.

Slowdown Antitrust Investigations by Decentralization

When multi-product firms make simultaneous price-fixing agreements in different markets, the introduction of leniency programs may induce firms to compartmentalize their activities. Doing so results in slowdown antitrust investigations and decentralized firm can easily request leniency for a second cartel after the detection of an other. We study how variation of fine reduction may produce procompetitive but also procollusive effects.

The Effectiveness of a Leniency Program in Algerian and Comparative Competition Law: New Guidelines

Experience shows that in large cartel cases, there are often problems with proof of participation. More and more sophisticated techniques are being put in place by the conspiratorial companies in order to leave as few traces as possible. Thus, with the clemency programs, the risk of denunciation becomes a reality in the world of cartelists, so that the cartel is destabilized from within. The only way to limit the risks of denunciation is to increase controls on members and to strengthen the system of sanctions. All these measures have a cost, which is not negligible and is included in the cost / benefit calculation. The result of the calculation, negative, can dissuade companies from forming cartels. On the contrary, for the competition authorities, the financial benefits are in principle large. For this, clemency programs can effectively combat this type of behavior.

Lutte contre les cartels multimarchés : une comparaison expérimentale des programmes de clémence américain et européen

Cette expérience en laboratoire compare les programmes de clémence américain et européen concernant la lutte contre les cartels multimarchés. La clémence consiste à accorder à une entreprise, membre d’un cartel illicite, une réduction ou une annulation d’amende si elle coopère et apporte les preuves de ce cartel à l’Autorité de la concurrence. Lorsque ces cartels concernent plusieurs marchés, les États-Unis ont renforcé cette clémence pour inciter les membres d’un premier cartel condamné à en révéler d’autres. Comparé au programme européen, ce programme nommé Amnesty Plus peut encourager davantage la formation de cartels par réduction du coût espéré d’une condamnation. Nos résultats ne confirment pas cet effet procollusif mais montrent que l’incitation à dénoncer est significativement plus élevée sous Amnesty Plus, avant et après qu’un premier cartel a été détecté.

The Future of the Leniency Program as an Efforts to Reveal Cartel Practices in Indonesia

The Future of the Leniency Program as an Efforts to Reveal Cartel Practices in Indonesia

The effects of global leniency programs on margins and mergers

AbstractIn a cross‐country study, we investigate how staggered passage of national leniency programs from 1990–2012 has affected firms’ margins and merger activity. We find that these programs, which give amnesty to cartel conspirators that cooperate with antitrust authorities, reduced the gross margins of the affected firms. However, firms reacted to new regulations by engaging in more mergers that had negative effects on downstream firms. Our results imply that although these programs were generally effective, their full potential was mitigated by mergers that substitute for cartels, and that a strong merger review process might be a prerequisite for strengthening anti‐collusion enforcement.

The Welfare Implications of the Meeting Design of a Cartel

This paper investigates the welfare implications of introducing a delegation problem into a price-fixing collusion game. Within a model in which each cartel conspirator has an irreplaceable market expertise, I demonstrate that the delegation of decisions to representatives for concealment purposes can lead to inefficient decisions. In this context, while a more severe antitrust policy contributes to deterrence, it can also induce surviving cartels to maximize concealment through delegation, which creates inefficiencies that are not considered in standard models of collusion. Leniency programs can exacerbate this perverse effect of policy.

The Use of Leniency Programme in Detecting Cartels in Malaysia

Abstract The cartel is regarded as a desease that inflicts on the open market economy. Whilst its presence is detrimental to the public, the most serious issue is its secrecy, which has posed a major problem to competition authorities all over the world. To address this, many countries including Malaysia have introduced a leniency programme for the detection of cartels by persuading their members to approach the authorities to admit involvement in the cartel activities and assist the authorities to expose other cartel participants. The objective of this paper is to conduct a study on the legal framework of the cartel and Malaysia’s leniency programme. The paper contains a detailed analysis of the Competition Act 2010 (Act 712) (CA 2010), the Guidelines on Leniency Regime (Leniency Guidelines) by the Malaysian Competition Commission (MyCC) and academic research in this area. The findings show that while the leniency programme is available under the Leniency Guidelines, data on leniency applications made to date are not available on the MyCC’s website. In addition, the MyCC’s decisions published on its website revealed that of six cartels that were found to have committed infringement, none had been first detected through the leniency programme. Therefore, the effectiveness of the programme has yet to be proven.

Leniency Program to Prove the Cartel in the Enforcement of Business Competition Law

The strongest characteristic of the cartel is the nature of the confidentiality of the agreement. Because confidentiality makes proof very difficult. The difficulty of proving a cartel case is due to the limited authority of the KPPU in carrying out its duties. In connection with the difficulty in expressing the cartel, business competition authorities in several countries such as the United States, Japan, Australia and countries that are members of the European Union have implemented punitive relief programs. the main purpose of implementing a sentence relief program. The purpose of implementing a penalty relief program is for cartel actors to report their violations to competition authorities; giving a cold effect that prevents the formation of a cartel; and to obtain further information (evidence) regarding the existence of a cartel. Therefore, the implementation of a penalty relief program in business competition law in Indonesia is very urgent. Implementation of a penalty relief program will be effective if there is a strong legal basis in business competition law. Further suggestions to the Government and Parliament of the Republic of Indonesia need to amend Law No. 5 of 1999 by regulating provisions in a comprehensive manner regarding the sentence relief program. Keyword: cartel, law enforcement, leniency program. DOI : 10.7176/JLPG/87-14 Publication date :July 31 st 2019

The Principle of Relative Responsibility in Antitrust Damages

The present work focuses on the principle of relative responsibility set in the Damage Directive 2014/104/EU. The principle of relative responsibility “supposes a modulation (that does not qualify) to the principles of full compensation and joint and several liabilities insofar as it channels that responsibility, on the one hand, according to the criteria of the participation of the offender in the conduct that violates the rules of competition from its infringing participation fee; and on the other, it delimits and limits this responsibility based on the cooperation that the aforementioned offender has had on the basis of the leniency programs or the possible agreements reached with the injured parties.

The Italian Guidelines on Antitrust Compliance Programs and the Difficult Goal of Matching Deterrence, Education, and Business Ethics

In 2018, the Italian Competition Authority issued the “Guidelines on antitrust compliance programs”. The Guidelines identify the adoption and implementation of a robust and effective compliance program as a mitigating circumstance in the calculation of fines for anti-competitive violations. Specifically, the Guidelines allow for a reduction of up to 15% of the fine in the event the antitrust compliance program is adopted before the beginning of an investigation (so-called ex ante facto programs) and a more limited reduction, up to 5% of the fine, for compliance programs implemented during the investigation (so-called ex post facto programs). These reductions are applicable to fines imposed as a result of anticompetitive arrangements and abuses of a dominant position under both the European and Italian competition provisions. In this paper we argue that while the decision to incentivize compliance programs is justified by the lack of competition culture and the structure of the Italian industrial sector, the design of the incentive provided for in the Guidelines is wrong. In particular, the Guideines try to protect its most important enforcement tool, i.e. the leniency program, by conditioning the reward for successful compliance programs to the self-reporting to the competition authority. We suggest a different set of incentives that should protect the leniency program while maintaining the interest in adopting a compliance program. We furthermore suggest a change in the Italian fining Guidelines in order to make the incentives for the adoption of ex ante compliance programs more effective, especially for small and medium sized enterprises.

The Future of Cartel Deterrence and Detection

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?

Framework for the Experimental Research on Cartel Deterrence Through Leniency and Whistleblowing Programmes

Die deutsche Version des Papers ist abrufbar unter: https://ssrn.com/abstract=3337826 So far, leniency programmes have been widely used to combat cartels. A company participating in the cartel gets a reduction of its fine for the initial notification of the Antitrust Authorities (AA). The emerging trust problem and the increased attractiveness for a specific company to deviate from the cartel agreements are intended to effectively deter cartels. The introduction of an incentive-based whistleblowing programme for individuals could be another important contribution to the effective deterrence of cartels. The experimental design which is presented here serves to analyse such a whistleblowing programme and its interaction with a corporate leniency programme. The variation of the design regarding reductions in penalties and the interaction of the two measures makes it possible to examine in which cases deterrence of cartels can be achieved. Ultimately, these are fundamental findings which can serve as a basis for a criminal policy decision.