The EU Leniency Programme and Recidivism

The EU Leniency Programme and Recidivism The EU Leniency Programme aims to encourage the dissolution of existing cartels and the deterrence of future cartels, through self-reporting and/or significant cooperation by cartel members during an investigation. However, the European Commission guidelines are vague in terms of the factors that influence the granting and scale of leniency-related penalty reductions. In this paper, the empirical analysis of the penalty reductions that have been granted shows, as expected, that the first reporting or cooperating firms receive generous fine reductions. More importantly, there is some evidence that firms can “learn how to play the leniency game”, either learning how to cheat or how to report, as the reductions that are given to repeat (and multiple) offenders are substantially higher. These results have an ambiguous impact on firms’ incentives and major implications for policy making. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Industrial Organization Springer Journals

The EU Leniency Programme and Recidivism

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Publisher
Springer Journals
Copyright
Copyright © 2015 by Springer Science+Business Media New York
Subject
Economics; Industrial Organization; Microeconomics
ISSN
0889-938X
eISSN
1573-7160
D.O.I.
10.1007/s11151-015-9474-z
Publisher site
See Article on Publisher Site

Abstract

The EU Leniency Programme aims to encourage the dissolution of existing cartels and the deterrence of future cartels, through self-reporting and/or significant cooperation by cartel members during an investigation. However, the European Commission guidelines are vague in terms of the factors that influence the granting and scale of leniency-related penalty reductions. In this paper, the empirical analysis of the penalty reductions that have been granted shows, as expected, that the first reporting or cooperating firms receive generous fine reductions. More importantly, there is some evidence that firms can “learn how to play the leniency game”, either learning how to cheat or how to report, as the reductions that are given to repeat (and multiple) offenders are substantially higher. These results have an ambiguous impact on firms’ incentives and major implications for policy making.

Journal

Review of Industrial OrganizationSpringer Journals

Published: Aug 8, 2015

References

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