Abstract
The European Commission has in recent years initiated an effort to facilitate private actions for damages in cartel cases. This paper demonstrates in a stylized game-theoretic framework that an increase in antitrust damages can be pro-collusive when a leniency program is already in place. The result holds true even if antitrust authorities are allowed to re-shape their leniency program in reaction to the higher damage level. Larger damage payments imply lower incentives to self-report if damages are not fully encompassed by the leniency program; in effect, the program has to be more generous to enforce self-reporting. But if antitrust authorities are not allowed to offer cash rewards to whistle-blowers, the sufficient level of generosity might be unattainable.
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Notes
Barnett (2007).
European Commission (2008).
In the US, courts are permitted to triple the amount of compensatory damages to be awarded to a plaintiff. The leniency program allows applicants to escape treble damages but they still face a single damage claim.
Nevertheless, it is often seen that firms approaching the US Department of Justice in second position or later have had their sanctions reduced through plea bargaining outside the formal framework of the leniency program. It is, however, easily seen that such reductions are not optimal if the cartel as in this model consists of only two firm.
To be precise, \(F_{R}^{\ast }\left( D\right)\) must be infinitesimally below \(\lambda F-\left(1-\lambda \right) D.\) However, I allow myself to ignore this detail.
Korea is to my knowledge the only exception. See Spagnolo (2008).
See Connor (2003).
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Silbye, F. A note on antitrust damages and leniency programs. Eur J Law Econ 33, 691–699 (2012). https://doi.org/10.1007/s10657-011-9246-7
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DOI: https://doi.org/10.1007/s10657-011-9246-7