Leniency Programs for Multimarket Firms: The Effect of Amnesty Plus on Cartel Formation

Yassine Lefouili and Catherine Roux

Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) from Université de Lausanne, Faculté des HEC, DEEP

Abstract: We examine the effect of the Amnesty Plus policy on firms' incentives to engage in cartel activities. Amnesty Plus is a proactive antitrust enforcement strategy aimed at attracting amnesty applications by encouraging firms already convicted in one market to report collusive agreements in other markets. It has been heavily advertised that Amnesty Plus weakens cartel stability. We show to the contrary that Amnesty Plus does not always have this desirable effect. Only under specific conditions, Amnesty Plus deters a cartel which would have been sustainable under an antitrust policy without Amnesty Plus. Otherwise, Amnesty Plus is either neutral or even stabilizes a cartel. We also show that firms can exploit their multimarket contact to reduce the effectiveness of the Amnesty Plus policy.

Keywords: Amnesty Plus; Leniency Program; Multimarket Contact; Antitrust Policy (search for similar items in EconPapers)
JEL-codes: K21 K42 L41 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-ind and nep-law
Date: 2008-10

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Persistent link: http://EconPapers.repec.org/RePEc:lau:crdeep:08.05

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