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Denying Leniency to Cartel Instigators: Costs and Benefits
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Denying Leniency to Cartel Instigators: Costs and Benefits

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Abstract

A large number of countries have introduced successful leniency programs into their competition law enforcement to encourage colluding firms to come forward with evidence that will help detect cartels and punish price-fixers. This paper studies a feature of some of these programs that has received relatively little attention in the literature: the inclusion of “No Immunity for Instigators Clauses” (NIICs). These provisions deny leniency benefits to parties that instigate cartel behavior or function as cartel ringleaders. Our results show that NIICs can lead to increased or decreased levels of cartel conduct. By removing the instigator’s benefit from cooperating with the authorities, a NIIC undoes some of the destabilizing benefit the leniency program was intended to generate and thereby furthers cartel stability. On the other hand, the instigator faces an asymmetrically severe punishment under a NIIC and this can reduce the incentive to instigate in the first place.

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  • Zhiqi Chen & Subhadip Ghosh & Thomas W. Ross, 2015. "Denying Leniency to Cartel Instigators: Costs and Benefits," Carleton Economic Papers 15-01, Carleton University, Department of Economics.
    • Handle: RePEc:car:carecp:15-01
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    Cited by:

    1. Marcel Boyer & Thomas W. Ross & Ralph A. Winter, 2017. "The rise of economics in competition policy: A Canadian perspective," Canadian Journal of Economics, Canadian Economics Association, vol. 50(5), pages 1489-1524, December.
    2. Juan Luis Jiménez & Manuel Ojeda-Cabral & José Manuel Ordóñez-de-Haro, 2023. "Who Blows the Whistle on Cartels? Finding the Leniency Applicant at the European Commission," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 63(2), pages 123-153, September.
    3. Georg Clemens & Holger A. Rau, 2019. "Do discriminatory leniency policies fight hard‐core cartels?," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 28(2), pages 336-354, April.
    4. Isogai, Shigeki & Shen, Chaohai, 2023. "Multiproduct firm’s reputation and leniency program in multimarket collusion," Economic Modelling, Elsevier, vol. 125(C).
    5. Marc Blatter & Winand Emons & Silvio Sticher, 2018. "Optimal Leniency Programs When Firms Have Cumulative and Asymmetric Evidence," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 52(3), pages 403-427, May.
    6. Catarina Marvão & Giancarlo Spagnolo, 2018. "Cartels and leniency: Taking stock of what we learnt," Chapters, in: Luis C. Corchón & Marco A. Marini (ed.), Handbook of Game Theory and Industrial Organization, Volume II, chapter 4, pages 57-90, Edward Elgar Publishing.
    7. Konstantinos Charistos, 2022. "Ringleader Discrimination in Leniency Policies," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 61(3), pages 297-315, November.

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    More about this item

    Keywords

    antitrust; collusion; leniency programs; instigators;
    All these keywords.

    JEL classification:

    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law

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