Cartel Leniency and Settlements: A Joint Perspective

Peter Dijkstra and Jacob Seifert

Review of Industrial Organization, 2023, vol. 63, issue 2, No 6, 239-273

Abstract: Abstract This paper studies the interactions between a cartel leniency program and a settlement procedure. The EU settlement procedure gives colluding firms that do not apply for leniency an additional opportunity to cooperate with the competition authority in exchange for a reduced fine after a preliminary case has been established against them. We derive the conditions under which colluding firms apply for leniency, settle, or refuse to cooperate with the authority in equilibrium. Our policy results show that settlements can act as a complement or as a substitute to the leniency program. We also study the welfare-optimal policy and highlight a novel interdependence between the fine reductions that should be offered to leniency applicants and to settling firms.

Keywords: Cartels; Leniency; Settlements; Welfare (search for similar items in EconPapers)
JEL-codes: K21 L31 L41 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s11151-023-09910-4

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