Cartel deterrence and settlements: the Brazilian experience

Paulo Azevedo and Alexandre Lauri Henriksen

No 265, Textos para discussão from FGV EESP - Escola de Economia de São Paulo, Fundação Getulio Vargas (Brazil)

Abstract: Settlements are an important part of a program of cartel deterrence, particularly when the likelihood of conviction and the litigation costs are higher. This type of negotiated procedure to reach finality is in essence complementary to the fully adversarial procedures associated to the trial by the administrative or judicial courts, and to other investigative instruments, such as the leniency agreement. The Brazilian experience provides some insights about the different models of direct settlement in cartel cases and the complex interaction among settlements, leniency agreements, and trial outcome. First, there is leeway for the complementary models of settlements, the first oriented mainly to increasing the likelihood of detection, and the second oriented to saving social costs of litigation. Second, the concern with the preservation of the demand for leniency agreements led the competition authority to restrict the use of settlements, which are effectively designed for the defendants that are likely guilty and give higher value to finality. The recent experience illustrates that the current settlement policy has not caused any adverse effect on leniency agreements, while reducing litigation costs and granting finality in some cases.

Date: 2010-07-22
New Economics Papers: this item is included in nep-com and nep-ind
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