Private antitrust enforcement and the role of harmed parties in public enforcement

Abstract

It is commonly believed that the possibility to sue privately for antitrust damages increases the probability that anticompetitive actions are prosecuted at the cost of an increased probability that procompetitive actions are prosecuted. We extend the analysis by taking into account that private parties often submit evidence during public investigation. Such parties consider private suit as a partial substitute for public prosecution. The trial option might induce these parties to be less willing to contribute evidence to public cases. Private trials crowd out public prosecution. In effect, the probability of prosecution of anticompetitive actions might decrease, while the earlier result that the probability of prosecuted actions being prosecuted is confirmed. In general, while the attractiveness of trials weakly decreases by considering a reporting possibility, they can remain an enforcement efficacy increasing institution.

Appendix

1.1 Proof of Corollary 3

For the first statement, see that an increase in $\kappa _1$ increases all $\overline{c}^{NT}_{AC}$, $\overline{c}^{T}_{AC}$, $\overline{c}^{NT}_{PC}$ and $\overline{c}^{NT}_{PC}$ as can be seen from (2), (4), (9) and (11), whereby all $c_i$ for $i=1,...,6$ increase. If $c_1$ and $c_2$ increase, the threshold for trials increasing AC deterrence strictly increases for the affected $c$ from minimally $\rho _5$ to maximally $\rho _1$. For an increase in $c_3$ the trial deterrence threshold for affected $c$ increases from $\rho _3$ to $\rho _5$. For increases in $c_4$ and $c_5$ the threshold strictly increases from minimally $\rho _2$ to maximally $\rho _3$. For an increase in $c_6$ the threshold for affected $c$ decreases from $\rho _1$ to $\rho _2$. This completes the proof for the first statement.

For the second statement, see that an increase in $\kappa _2$ decreases $\overline{c}^{T}_{AC}$ and $\overline{c}^{T}_{PC}$ while it does not affect $\overline{c}^{NT}_{AC}$ and $\overline{c}^{NT}_{PC}$, whereby the value $c_1$, $c_2$, $c_4$ and $c_5$ decrease while $c_3$ and $c_6$ are not affected. Together with the arguments how changes in $c$ affect the trial impact threshold in the proof of the first statement, this completes the proof of the second statement.

For the third statement, see that an increase in $\kappa _3$ increases $\overline{c}^{T}_{AC}$ and $\overline{c}^{T}_{PC}$ while it does not affect $\overline{c}^{NT}_{AC}$ and $\overline{c}^{NT}_{PC}$, whereby the value $c_1$, $c_2$, $c_4$ and $c_5$ increase while $c_3$ and $c_6$ are not affected. Together with the arguments how changes in $c$ affect the threshold in the proof of the first statement, this completes the proof of the third statement.