Miriam C. Buitem ‘The Ambivalent Effect of Antitrust Damages on Deterrence’ (2019) CPI Antitrust Chronicle Ju

The possible undermining effect of damages actions on leniency programs has been hotly debated. The concern is that the prospect of damages claims may discourage colluding firms from applying for leniency, since the leniency program only shields them from public fines, not from civil damages. Civil damages may contribute to the goal of preventing cartels by increasing the expected costs of starting a cartel. However, civil damages may not enhance antitrust deterrence if colluding firms believe it to be unlikely that competition authorities will detect their cartel. For leniency programs to put cartel members in a prisoners’ dilemma, confessing must be more attractive than staying quiet. If civil damages are substantial, leniency may not sufficiently improve a colluding firms’ position as compared to their non-reporting co-conspirators, and hence their incentive to apply for leniency will decrease, together with the overall odds of cartel detection. This note, available here, discusses the ambivalent effect of antitrust damages actions on deterrence. It considers how fines…

Nicole Rosenboom and Daan in ’t Veld ‘The Interaction of Public and Private Cartel Enforcement’ (2019) World Competition 42(1) 87

Despite its broad title, this article – available here – investigates mainly the interaction between leniency programmes and civil damages claims.  Most competition authorities have adopted leniency programmes to uncover cartels. To increase the overall deterrent effect of competition law, many jurisdictions have also introduced private competition enforcement, which increases the total potential financial exposure of cartel members. The impact of private competition enforcement – and particularly the concomitant increase in the liability of potential leniency applicants – on leniency programmes has been discussed in the literature, but there is an absence of empirical studies. This article tries to fill this gap by studying the empirical impact of private competition enforcement on leniency. It uses two methods: surveys of Dutch firms and competition lawyers, and econometric conjoint analysis. The authors conclude that firms’ decisions to apply for leniency are affected by the magnitude of the personal penalty to which directors are subject and the amount of fine reduction following a successful leniency application….

William E. Kovacic, Robert C. Marshall and Michael J. Meurer on ‘Serial collusion by multi-product firms’ (2018) Journal of Antitrust Enforcement 6 96

This paper, available here, is long and so, I am afraid, is the review. In short, the authors of this paper take issue with the assumption that each cartel in which a given firm participates is a single instance of conduct that is independent of other cartel conduct by the firm. Evidence of serial collusion by major multi-product firms is readily observable from the public record in a number of sectors, such as chemicals, electronics, car-parts, financial products or graphite. Further, collusion persists in at least three of these industries, with new investigations having recently been opened into collusion in the chemical, auto parts, and financial products markets. The paper provides empirical evidence that many multi-product firms have each participated in several cartels over the past 50 years. It argues that traditional assumptions regarding how cartelists operate, and consequent enforcement strategies, are deficient in many aspects. Reflecting this, the authors make policy recommendations to reign in serial collusion. The article is structured as…

Miriam C. Buiten, Peter van Wijck and Jan Kees Winters ‘Does the European Damages Directive Make Consumers Better Off’ (2018) Journal of Competition Law & Economics, 14(1) 91

The paper seeks to uncover what are the implications of private enforcement for deterrence, leniency, and consumer welfare. To address this question, the authors develop a dynamic model that considers two opposing effects on deterrence that arise from allowing partial compensation of victims. First, competition damages may reduce incentives to apply for leniency. Second, liability for damages may lead firms to refrain from engaging in a cartel in the first place by increasing potential participation costs. The authors find that these effects act in opposite directions, so there is a balance to be struck between promoting compensation and leniency applications. The paper is organized as follows. Section II discusses the legal position of competition victims under the EU Damages Directive, and remaining obstacles to obtaining compensation. The Directive aims to remove the main obstacles that victims of competition law infringements face when trying to obtain compensation for their loss. The Directive specifies that “any natural or legal person who has…

Murillo Campello (Cornell), Daniel Ferrés  (Montevideo) and Gaizka Ormazabal  (IESE)  ‘Whistle-Blowers on the Board? The Role of Independent Directors in Cartel Prosecutions’ (2017) The Journal of Law and Economics 60(20 241

The goal of this paper – which can be found here – is to examine ‘whether market-based penalties for nonexecutive officials [more specifically, independent board members] in firms involved in price-fixing are significant in shaping their behaviours.’ The reason to focus on independent board members is that they ‘are highly sensitive to market sanctions (for example, in the form of reputational losses). Importantly, directors have powers not only to order internal investigations but also to require officers and employees to cooperate with prosecutors. In some cases, boards also establish special committees and appoint outside counsel to consider applications for leniency. As a result, they constitute a set of corporate insiders whom antitrust policies can exploit in designing prosecution policies.’ The paper is structured as follows: Second 2 begins by providing an overview of US and EU regimes for cartel prosecution and leniency. It also describes the role of corporate boards in cartel investigations. In the US: ‘Once the corporation learns…

Giancarlo Spagnolo and Catarina Marvão ‘Cartels and Leniency: Taking stock of what we learnt’

This paper, available at https://ideas.repec.org/p/hhs/hasite/0039.html, reviews the literature on the incentives of leniency applicants.  It is a really useful piece for anyone doing leniency work, and extremely thorough. It is not possible to  provide a summary of the paper: it reviews too many papers and possible scenarios (the first section looks at economic models, the second at empirical evidence). If there is a basic argument underpinning all of this, it seems to be that incentives to increase cartel enforcement results may not be well-aligned with maximising welfare /  may lead to excessively generous leniency conditions; and that leniency reduces collusion but that the EU is too nice to cartelists and extends leniency to far too many companies.

Wouter Wils ‘The Use of Leniency in EU Cartel Enforcement: An Assessment After Twenty Years’

This paper by Wouter Wils – available at https://www.concurrences.com/en/review/numeros/no-1-2017/articles/the-use-of-leniency-in-eu-cartel-enforcement-an-assessment-after-twenty-years – describes  20 years of leniency in Europe. In addition to some interesting statistics, it contains an overview of arguments for and against the use of leniency. It is useful for anyone doing bid-rigging / promoting the virtues of competition, but putting at risk the job of thousands of trainee lawyers who will no longer have a job searching for examples of the practical application of  leniency by the European Commission.