@Article{p10749,
author = {Evenett, Simon J. and Levenstein, Margaret C. and Suslow, V.al{\'e}rie Y.},
title = {International Cartel Enforcement: Lessons From the 1990s},
journal = {The World Economy},
volume = {24},
number = {9},
pages = {1221-1245},
year = {2002},
abstract = {The enforcement record of the 1990s has demonstrated that international
private cartels are neither relics of the past nor do they always fall quickly under the
weight of their own incentive problems. Of a sample of forty cartels prosecuted by the
United States and European Inion in the 1990s, twenty-four cartels lasted at least four
years. And for the twenty of the cartels in this sample where sales data are available,
the annual worldwide sales in the affected products exceeded US\$30 billion. Prevailing
national competition policies are oriented towards addressing harm done in domestic
markets, and in some cases merely prohibit cartels without taking strong enforcement
measures. In this paper we propose a sequence of reforms to national policies and to
international cooperation that will strengthen the deterrents against international cartels.
Furthermore, aggressive prosecution of cartels must be complemented by vigilance in
other areas of competition policy. If not, firms will respond to the enhanced deterrents to
cartelisation by merging or by taking other measures that lessen competitive pressures.},
location = {},
keywords = {leniency; antitrust}}
@Article{p10742,
author = {Chen, Joe and Harrington Jr, Joseph E.},
title = {The Impact of the Corporate Leniency Program on Cartel Formation and the Cartel
Price Path},
journal = {The Political Economy of Antitrust},
volume = {},
number = {},
pages = {},
year = {2007},
abstract = {Previous research exploring the effect of corporate leniency programs has
modelled
the oligopoly stage game as a Prisonersʼ Dilemma. Using numerical analysis, we
consider the Bertrand price game and allow the probability of detection and penalties
to be sensitive to firmsʼ prices. Consistent with earlier results, a maximal leniency
program necessarily makes collusion more difficult. However, we also find that partial
leniency programs - such as in the U.S. - can make collusion easier compared to
offering no leniency. We also show that even if cartel formation is not deterred, a
leniency program can reduce the prices charged by firms},
location = {},
keywords = {leniency; antitrust}}
@Article{p10737,
author = {Chemtob, Stuart M.},
title = {Antitrust Deterrence in the United States and Japan},
journal = {speech at the Conference on Competition Policy in the Global …},
volume = {},
number = {},
pages = {},
year = {2000},
abstract = {Both the United States and Japan, of course, are members of the OECD
Council and were strong proponents of the 1998 Recommendation. The antitrust laws of
both countries share a number of common characteristics with respect to the treatment
of hard core cartel activities, subjecting participating enterprises to the possibility of
criminal prosecution and high monetary fines and subjecting responsible individuals to
the possibility of criminal fines and incarceration. Both systems also permit private damage
suits against cartel participants (although only the United States provides for treble
damages awards.) These similarities should not be at all surprising given that the Antimonopoly
Act ("AMA") was modeled on U.S. antitrust laws and drafted during the days
of the allied occupation of Japan.
While the Sherman Act and Antimonopoly Act have many similarities, for many years
the enforcement policies of the U.S. Department of Justice and the Japan Fair Trade
Commission ("JFTC") with respect to cartels were very different, with the JFTC only infrequently
taking formal action against hard core restraints. However, over the past decade,
the enforcement policies of the two agencies in the area of cartels have been converging,
and it is now fair to say that both the Antitrust Division and the JFTC give high
priority to the investigation and elimination of cartel practices and are among the most
active enforcement agencies globally in this area.
Nonetheless, from the perspective of deterrence of hard-core anticompetitive conduct,
the two systems have fundamentally different approaches, with the United States
stressing punishment and deterrence and Japan focused more on the elimination of the
illegal conduct once it is uncovered, rather than on the elimination of the economic incentives
for engaging in those activities.},
location = {},
keywords = {leniency; antitrust}}
@Article{p10719,
author = {Buccirossi, Paolo and Spagnolo, Giancarlo},
title = {The Effects of Leniency on Illegal Transactions: How (Not) to Fight Corruption},
journal = {learlab.it},
volume = {},
number = {},
pages = {},
year = {2001},
abstract = {},
location = {},
keywords = {leniency; antitrust}}
@Article{p10736,
author = {Buccirossi, Paolo and Spagnolo, Giancarlo},
title = {Leniency Policies and Illegal Transactions},
journal = {Journal of Public Economics},
volume = {},
number = {},
pages = {},
year = {2006},
abstract = {We study the consequences of leniency—reduced legal sanctions for
wrongdoers who spontaneously
self-report to law enforcers—on sequential, bilateral, illegal transactions, such as corruption,
manager–
auditor collusion, or drug deals. It is known that leniency helps deterring illegal relationships
sustained by
repeated interaction. Here we find that—when not properly designed—leniency may simultaneously
provide an effective governance mechanism for occasional sequential illegal transactions
that would not be
feasible in its absence.},
location = {},
keywords = {leniency; antitrust}}
@Article{p10715,
author = {Brisset, Karine and Thomas, Lionel},
title = {Leniency Program: A New Tool in Competition Policy to Deter Cartel Activity in
Procurement Auctions},
journal = {European journal of law and economics},
volume = {},
number = {},
pages = {},
year = {2004},
abstract = {This paper discusses the impact of a leniency program on incentives within
cartels. The objective of this program
is to encourage a cartel member to confess and implicate his co-conspirators with
hard evidence about
their collusive agreement. We develop a simple model of cartel behavior under a firstprice
sealed-bid procurement
auction and we show how an effective leniency program can prevent the internal
coordination of cartel
members.
Keywords: cartels, leniency programs, competition policy, auctions},
location = {},
keywords = {leniency; antitrust}}
@Article{p10711,
author = {Brenner, Steffen},
title = {An Empirical Study of the European Corporate Leniency Program},
journal = {Manuscrtipt},
volume = {},
number = {},
pages = {},
year = {2005},
abstract = {Leniency programs are widely used as instruments of competition policy.
They
are supposed to serve two purposes: in the short-run to facilitate the detection of
cartels and thereby to reduce cost of legal enforcement, and in the long-run to deter
firms from antitrust abuse. In our empirical study of the 1996 EU Leniency Program,
we find strong evidence that the program provides incentives to reveal information
on criminal activities in the sense that agencies are better informed about the cartel
conduct than they would be absent the program. Despite of that, investigation and
prosecution cost reductions seem to be rather modest.
On deterrence, we neither find that the leniency program stabilizes cartels
through facilitating punishing strategies, nor do we find that cartels are destabilized
because defecting from a cartel becomes less costly. The sharp rise in the
number of convicted cartels after introducing the program may be attributed to a
rise of cartel activity caused by an accelerated market integration in the EU in the
beginning of the 1990s.},
location = {},
keywords = {leniency; antitrust}}
@Article{p10721,
author = {Apesteguia, J. and Dufwenberg, M. and Selten, R.},
title = {Blowing the Whistle},
journal = {Economic Theory},
volume = {},
number = {},
pages = {},
year = {2007},
abstract = { Leniency clauses, offering cartelists legal immunity if they blow the
whistle on each other, is a recent anti-trust innovation. The authorities wish to thwart
cartels and promote competition. This effect is not evident, however; whistle-blowing
may enforce trust and collusion by providing a tool for cartelists to punish each
other. We examine the impact of leniency law, and other rules, experimentally.},
location = {},
keywords = {leniency; antitrust; experiment}}
@Article{p10746,
author = {Aubert, C{\'e}cile and Rey, Patrick and Kovacic, William E.},
title = {The Impact of Leniency and Whistle-Blowing Programs on Cartels},
journal = {International Journal of Industrial Organization},
volume = {},
number = {},
pages = {},
year = {2006},
abstract = {Antitrust authorities have set up leniency programs for cartel members that
denounce their collusive
agreements. These programs help prosecute participants and can thereby deter collusion.
We compare the
impact of reduced fines and positive rewards and argue that rewarding individuals, including
firm
employees, can deter collusion in a more effective way.
We discuss possible adverse effects of whistle-blowing programs on firms' behavior,
and particularly on
turnover, incentives to innovate and cooperation. We also explore explanations for the
puzzling fact that
managers keep incriminating evidence and argue reward programs actually provide additional
incentives
for keeping such evidence.},
location = {},
keywords = {leniency; antitrust}}
@Article{p10731,
author = {Feess, Eberhard and Walzl, Markus},
title = {An Analysis of Corporate Leniency Programs and Lessons to Learn for {Us} and
{Eu} Policies},
journal = {arno.unimaas.nl},
volume = {Paper 24},
number = {},
pages = {},
year = {2003},
abstract = {We develop a model to analyze and to compare the corporate
leniency programs in the EU and the USA. Both programs
are based on the idea that strategic interactions between
the team members can be used to increase expected
fines by reducing fines for self-reporting firms. This is in
sharp contrast to the well-known literature on the single
violator case where self-reporting schemes can never lead
to higher deterrence. Although the two programs share
some common features, there are also important defferences
that can be analyzed in our model with two selfreporting
stages, heterogenous types with respect to the
amount of evidence provided, and ex post asymmetric information.},
location = {},
keywords = {leniency; antitrust}}
@Article{p10710,
author = {Hammond, Scott D.},
title = {Detecting and Deterring Cartel Activity Through an Effective Leniency Program},
journal = {Paper by the Director of Criminal Enforcement},
volume = {},
number = {},
pages = {},
year = {2000},
abstract = { Over the last five years, the United States' Corporate Leniency Program
("Amnesty Program") has been responsible for detecting and cracking more international
cartels than all of our search warrants, secret audio or videotapes, and FBI interrogations
combined. It is, unquestionably, the single greatest investigative tool available
to anti-cartel enforcers. An effective Leniency Program will lead cartel members, in
some cases, to confess their conduct even before an investigation is opened. In other
cases, it will induce organizations already under investigation to abandon the cartel
stonewall, race to the government, and provide evidence against the other cartel members.
While the availability of some investigative techniques, such as consensual monitoring
or the compulsion of sworn testimony, may be limited or nonexistent in jurisdictions
where hardcore cartel activity is not a criminal offense, Leniency Programs can potentially
be utilized in any jurisdiction where such conduct is treated as a criminal, civil or
administrative offense.
This paper discusses the reasons behind the success of the U.S. Amnesty Program and
identifies three hallmarks for both a successful Amnesty Program and an enforcement
program that deters cartel activity. The issues of detection and deterrence are closely
aligned because the bedrock principles that apply to effectively preventing cartels are
also at the core of implementing a successful leniency program for detecting cartel activity
once it does occur. The three critical ingredients are as follows. First, one's antitrust
laws must provide the threat of stiff sanctions for those who participate in hardcore
cartel activity. Second, organizations must perceive a significant risk of detection by antitrust
authorities if they engage in cartel activity. Third, antitrust authorities must provide
transparency, to the greatest extent possible, throughout the anti-cartel enforcement
program so that prospective cooperating parties can predict with a high degree of certainty
their treatment following cooperation. These three major cornerstones -- stiff potential
penalties, heightened fear of detection, and transparency in enforcement policies
-- are at the heart of both our Amnesty Program and our deterrence efforts.},
location = {},
keywords = {leniency; antitrust}}
@Article{p10723,
author = {Hammond, Scott D.},
title = {An Overview of Recent Developments in the Antitrust Divisionʼs Criminal Enforcement
Program},
journal = {available for download from http://www. usdoj. gov},
volume = {},
number = {},
pages = {},
year = {2005},
abstract = { The detection, prosecution, and deterrence of cartel offenses is the highest
priority of the Antitrust Division. The Division places a particular emphasis on combating
international cartels that target U.S. markets because of the breadth and magnitude of
the harm that they inflict on American businesses and consumers. This enforcement
strategy has succeeded in cracking dozens of international cartels, securing convictions
and jail sentences against culpable executives, and obtaining record-breaking corporate
fines. For example:
Over the last five years, over 80 individuals have served, or are currently serving, prison
sentences in cases prosecuted by the Antitrust Division. A total of 18 foreign nationals
from 9 different countries have submitted to U.S. jurisdiction and been sentenced to incarceration
in U.S. prisons.
The five longest jail sentences in the Division's history have all been imposed in the last
five years including a 10 year jail sentence in one case.
The trend towards more frequently imposed and longer average prison terms for antitrust
offenders has resulted in an average jail sentence over the past three years of approximately
18 months nearly two and one-half times the average jail sentence in the
1990's.
Since FY 1997, over \$2 billion in criminal fines have been imposed in Division cases,
well over 90 percent of this total were obtained in connection with the prosecution of international
cartel activity.
In FY 2004, \$360 million in criminal fines were obtained against 17 corporations and 15
individuals. This total includes a \$160 million criminal fine imposed against Infineon
Technologies AG the third largest criminal antitrust fine ever for its role in a conspiracy
to fix prices of dynamic random access memory ("DRAM") sold to computer manufacturers.
In addition, five other companies agreed to pay fines of \$10 million or more in
FY 2004. It is noteworthy that the Supreme Court's decision in Blakely v. Washington,
124 S.Ct. 2531 (2004), has not limited the Division's ability to obtain heavy fines as four
of the six corporate defendants who agreed to pay fines of \$10 million or more last year
involved cases that were filed after the Blakely decision.
As outlined further in the summary below, the stakes will continue to rise for companies
and their executives who engage in antitrust offenses. In June 2004, the maximum penalties
for Sherman Act violations were raised significantly by Congress. The new law,
the Antitrust Criminal Penalty Enhancement and Reform Act of 2004, increases the
maximum Sherman Act fine corporate fine to \$100 million, the maximum individual fine
to \$1 million, and the maximum Sherman Act jail term to 10 years. The increased sentences
will bring antitrust prison sentences in line with those for other white-collar
crimes and ensure that corporate fines accurately reflect the enormous harm inflicted by
cartels to our economy. The Act also enhances the incentive for corporations to self report
illegal conduct by limiting the damages recoverable from an applicant to the Division's
Corporate Leniency Program, that also cooperates with private plaintiffs in their
damage actions against remaining cartel members, to the damages actually inflicted by
the amnesty applicant's conduct. Moreover, increased cooperation and coordination
among antitrust authorities are ensuring that national borders do not act as obstacles to
the successful investigation and prosecution of targets abroad.},
location = {},
keywords = {leniency; antitrust}}
@Article{p10724,
author = {Harrington Jr, Joseph E.},
title = {Optimal Corporate Leniency Programs},
journal = {The Journal of Industrial Economics},
volume = {},
number = {},
pages = {},
year = {2008},
abstract = {This study characterizes the corporate leniency policy that minimizes the
frequency with which collusion occurs. Though it can be optimal to provide
only partial leniency, plausible sufficient conditions are provided whereby the
antitrust authority should waive all penalties for the first firm to come forward.
It is also shown that restrictions should be placed on when amnesty is awarded,
though it can be optimal to award amnesty even when the antitrust authority is
very likely to win the case without insider testimony.},
location = {},
keywords = {leniency; antitrust}}
@Article{p10745,
author = {Hinloopen, Jeroen},
title = {The Effectiveness of Leniency Programs Under European Style Antitrust Legislation.},
journal = {Delft University of Technology},
volume = {},
number = {},
pages = {},
year = {2002},
abstract = {The condition is derived for Friedmanʼs trigger strategy to induce
cartel stability under an active antitrust authority whoʼs success of
breaking the cartel increases over time.},
location = {},
keywords = {leniency; antitrust; cartel stability}}
@Article{p10729,
author = {Motta, Massimo and Polo, Michele},
title = {Leniency Programs and Cartel Prosecution},
journal = {International Journal of Industrial Organization},
volume = {},
number = {},
pages = {},
year = {2003},
abstract = {We study the enforcement of competition policy against collusion under leniency
programs, which give reduced fines to firms that reveal information to the Antitrust
Authority. Leniencyprogramsmakeenforcement moreeffectivebut theymayalsoinduce
collusion, since theydecrease the expectedcost of misbehaviour. We show that inthe
optimal policy the former effect dominates, calling for leniency programs when the
Antitrust Authorityhaslimitedresources.We also show that thesep rograms should apply
to
firms that reveal information even after an investigation is started.},
location = {},
keywords = {leniency; antitrust}}
@Article{p10713,
author = {Spagnolo, Giancarlo},
title = {Self-Defeating Antitrust Laws: How Leniency Programs Solve Bertrand's Paradox
and Enforce Collusion …},
journal = {papers.ssrn.com},
volume = {},
number = {},
pages = {},
year = {2000},
abstract = {I find that current US's and EU's Antitrust laws -- in particular their "moderate"
leniency programmes that only reduce or at best cancel sanctions for price-fixing
firms that self-report -- may make collusion enforceable even in one-shot competitive
interactions, like Bertrand oligopolies and first-price auctions, where no collusion would
be supportable otherwise. The reduced sanctions for firms that self-report provide the
otherwise missing credible threat necessary to discipline collusive agreements: they ensure
that if a firm unilaterally deviates from collusive strategies, other firms find it convenient
to punish it by reporting information to the Antitrust Authority.},
location = {},
keywords = {leniency; antitrust}}