The detrimental effects of granting access to leniency applications for eu antitrust law. An economic analysis of leniency programs in antitrust law. Evaluation of corporate compliance programs in criminal antitrust. Holding the enforcement policy of the antitrust authority. The department of justice doj or department released updated guidance on the antitrust divisions leniency program, on january 17, 2017. Evidence from antitrust experiments sseefi working paper series in economics and finance n. Leniency programs have turned to be weapons of mass dissuasion in the hands of antitrust enforcers against the more damaging forms of explicit collusion among rival firms in the market place. Corporations and individuals who report their cartel activity and cooperate in the divisions investigation of the cartel reported can avoid criminal conviction, fines, and prison sentences if they meet the requirements of the program. This paper identifies and then quantifies econometrically the impact of leniency programs on the perception of the effectiveness of antitrust policies in. Editorial antitrust leniency programmes christopher r leslie leniency programs represent the newest tool that antitrust enforcers can employ against pricefixing cartels. Justice department policy changes limit avenues of. Morgan lewis partner clayton everett on global antitrust. In addition to the ongoing paytv antitrust dispute, the cak has drafted a law the finance bill of 2014 which will create a kenyan cartel leniency programme in order for whistleblower companies and their directors to get off with lighter punishment, for volunteering information that helps to break up cartels, as aat reported here. A third caveat in the leniency context is the wooden and inequitable application of sentencing guidelines.
Have more doubts about antitrust leniency benefits. This paper demonstrates in a stylized gametheoretic framework that an increase in antitrust damages can be procollusive when a leniency program is already in place. We find that leniency programs increase the perception of effectiveness by an order of magnitude ranging from 10% to 21%. Evaluating leniency with missing information on undetected. Evaluating the effectiveness of the brazilian leniency program. Doj antitrust division debuts guidance to incentivize corporate. Antitrust leniency program remains a good bet news. Globally, leniency programs are now present in more than 50 countries and jurisdictions. In sum, if i were picking some elements from column a the antitrust division leniency program and some from column b the criminal divisions pilot program it would look something like this. Evaluating antitrust leniency programs by joanramon. Does the antitrust compliance program detect and facilitate prompt. Justice department issues guidance on antitrust criminal. A competing risk model for cartels judged between 1996 and 2017 was estimated, allowing the cartel to end naturally or through antitrust intervention. The benefits to both the companies seeking leniency, and the.
Evaluating antitrust leniency programs competition. In less than two decades, most countries have introduced a leniency programme. Thus, the antitrust division will not disclose a leniency applicants identity, absent prior disclosure by or agreement with. A read is counted each time someone views a publication summary such as the title, abstract, and list of authors, clicks on a figure, or views or downloads the fulltext.
We conclude with a list of desiderata for leniency programs, some suggestions how to improve current ones and introduce whistleblower schemes, and an agenda of open issues for future research. Top components of effective antitrust corporate compliance. Challenges to international cartel enforcement and multi. The competition and antitrust related court matters we.
Introduction pricefixing cartels are often viewed as the most egregious of all antitrust violations. Joanramon borrell, juan luis jimenez and carmen garcia are evaluating antitrust leniency programs. Recent announcements from senior antitrust division officials have brought. Leniency programs have become weapons of mass dissuasion in the hands of antitrust enforcers against the more damaging forms of explicit collusion among rival firms in the market place. Macchi di cellere gangemi manages to identify the most appropriate solution approaches to the clients needs, which may include convincing authorities not to bring charges, securing immunity for targets of investigations and obtaining reduction of sanctions under the leniency programs. We find that leniency programs increase the perception of effectiveness by an order of magnitude ranging from 10 percent to 21 percent.
Ecn model leniency programme as revised in november 2012 i. The detrimental effects of granting access to leniency. The impact of a corporate leniency program on antitrust. According to the antitrust division, its leniency program is its most.
In a system of parallel competences between the european commission hereinafter the commission and national competition authorities hereinafter ncas, an application for leniency1 to one authority is not to be considered as an application for leniency to another. This article identifies and then quantifies econometrically the impact of leniency programs on the perception of the effectiveness of antitrust policies in the business community using panel data for as many as 59 countries. The leniency program, which remains in place under the new policy, provides. The world economic forum is an independent international organization committed to improving the state of the world by engaging business, political, academic and other leaders of society to shape global, regional and industry agendas. January 12, 2005 abstract leniency programs or policies reduce sanctions against cartel members that selfreport to the antitrust authority. Dorsey attorneys michael lindsay, ed magarian, bill michael and james nichols analyze in the antitrust source the u. This paper identifies and then quantifies econometrically the impact of leniency programs on the perception of the effectiveness of antitrust policies using country level panel data for a 10year span. Department of justice doj issued new guidance on its leniency program, under which cartel participants that cooperate with the government may avoid prosecution. Overview of the eu and uk rules applicable to cartels 29. It is a struggle between private and public enforcement of antitrust law in combination with aspects of fundamental rights. The antitrust division leniency program by william frank carroll, dykema gossett pllc once caught a federal criminal defendant generally finds it advantageous to cooperate with the prosecution if the evidence is sufficient for conviction. What makes the entire situation particularly complicated in the european union however, is.
Endogenous antitrust enforcement in the presence of a corporate leniency program. Doj antitrust division announces changes to corporate leniency. Statistics on european commission cartel enforcement 23 annex 2. As before stoltnielsen, the risk of leniency revocation will remain small. Justice department corporate antitrust leniency program. Endogenous antitrust enforcement in the presence of a.
Leniency programs have become weapons of mass dissuasion in the hands of antitrust enforcers against the more damaging forms of explicit collusion among rival firms in the. Doj antitrust divisions revised leniency program further. The antitrust divisions policy is to treat as confidential the identity of leniency applicants as well as any information they provide. The division has prepared revised model leniency letters and issued an explanatory document entitled frequently asked questions regarding the antitrust divisions leniency program the faq. Giancarlo spagnolo stockholm school of economics consip spa, and c. Under the program, antitrust violators can avoid all criminal penalties for antitrust violations, as long as the company complies with its obligations under a leniency agreement. Thats according to the preliminary findings of the 2017 midyear global cartel enforcement report from morgan lewis. This is a heavily revised version of the impact of a corporate leniency program on antitrust enforcement and cartelization april 2010. This paper identifies and then quantifies econometrically the impact of leniency programs on the perception of the effectiveness of antitrust policies.
It may be that the antitrust division can get the cooperation it needs with the corporate leniency program at a lower and fairer price. Leniency policy for individuals on august 10, 1993, the division announced a new corporate leniency policy under which a corporation can avoid criminal prosecution for antitrust violations by confessing its role in the illegal activities, fully cooperating with the division, and meeting the other specified conditions. This guidance document focuses on the evaluation of compliance programs in the context of criminal. The leniency programme in malaysias competition regime. Exploring timevarying policy impacts on cartel duration. How can eu antitrust enforcement against cartels be. The eu competition rules on cartels slaughter and may. Doj updates leniency program faqs insights skadden. The increase in prosecutions generated by leniency programs has of course led to huge fines in many cases.
Doj guidance increases benefits for antitrust compliance programs. A note on antitrust damages and leniency programs econbiz. European commission press release details page brussels, 15 th october 2009 work within the european competition network ecn, composed of the competition authorities of the 27 eu member states and of the european commission, has been a major catalyst in encouraging member states to introduce leniency programmes and in promoting convergence between them. Cades antitrust leniency program enables companies andor individuals who participate, or have participated, in a cartel or other anticompetitive practice, to obtain, by reporting it to cade, total exemption, or mitigation, of the fines and penalties applicable to them, by entering into a.
Department of justices recent clarification of a significant aspect of the corporate leniency program might appear to reinforce a longstanding approach to employees of type b leniency. Leniency programs have become weapons of mass dissuasion in the hands of antitrust enforcers against the more damaging forms of explicit collusion among. We use the dynamics of the gradual diffusion of leniency programs across countries and over time to evaluate the impact of the program, taking care of the bias caused by selfselection into the program. One thing we have seen this year is there are fewer large fines announced in the first. Since the us department of justices new leniency policies were introduced in 1993 the corpo. This effectiveness unambigously is enhanced by i increasing the reduction in fine payments in return for reporting a cartel, and ii increasing the expected perperiod cartel detection probability for any future period. A number of countries have followed the antitrust divisions lead and enacted similar programs to prosecute cartel activity. Thus, encompassing a resource constraint for the antitrust authority does not, by itself, alter the conclusion that leniency programs are e. Evaluating antitrust leniency programs request pdf.
This result is consistent with previous theoretical and experimental work. We focus on their ability to directly deter cartels and. In addition, for the first time, the division has published guidance on how prosecutors are to evaluate antitrust compliance programs. These programs offer cartel participants the opportunity to expose the cartel in exchange for immunity from criminal prosecution. Exogenous drivers of program adoption, such as regional or bilateral agreements that included antitrust reforms, help identify econometrically the programs impact. With dojs antitrust division and the ftc ramping up antitrust enforcement, it is critical for companies to take a hard look at their compliance programs and update them on a regular basis to avoid potential antitrust violations and discover antitrust malfeasance early on so a company can have the option of selfreporting and applying for leniency under dojs leniency. The result holds true even if antitrust authorities are allowed to reshape their. The article draws on program evaluation techniques to measure the impact of leniency programs on a broad measure of countrylevel perception of antitrust effectiveness. Leniency programs have been introduced gradually in antitrust legislation across the globe to fight more effectively against cartels. The challenges facing the antitrust leniency program and. The antitrust divisions leniency program has been an unqualified success. Evaluation of corporate compliance programs in criminal antitrust investigations.
This is a controversial topic but overall there is simply too much reliance on sentencing formulas both in the u. The european commission has in recent years initiated an effort to facilitate private actions for damages in cartel cases. Incorporated as a notforprofit foundation in 1971, and headquartered in geneva, switzerland, the forum is tied to no political. Evaluating leniency with missing information on undetected cartels. Doj antitrust leniency policy for individuals on august 10, 1993, the division announced a new corporate leniency policy under which a corporation can avoid criminal prosecution for antitrust violations by confessing its role in the illegal activities, fully cooperating with the division, and meeting the other specified conditions. In 1978, the antitrust division created a corporate leniency policy to increase incentives for companies to report criminal activity and cooperate with the antitrust division, and in 1994, expanded the program to individuals who approach the division on their own behalf, and not as part of a company proffer or confession. Antitrust compliance programs benefit companies by helping their employees avoid antitrust violations, the devastating consequences of which include heavy fines, criminal prosecution of the company and individual employees, and private damage actions and, very often, all of the above. Within a dynamic market environment the forces that drive the effectiveness of leniency programs in antitrust law are analyzed.
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