Leniency Programs for Multimarket Firms : The Effect of Amnesty Plus on Cartel Formation
Journal
International Journal of Industrial Organization
ISSN
0167-7187
ISSN-Digital
1873-7986
Type
journal article
Date Issued
2012-11
Author(s)
Abstract
We examine the effect of Amnesty Plus on dynamic cartel formation in a multimarket setting. The Amnesty Plus program has been adopted as part of the US Corporate Leniency Policy in 1999 and is now vigorously advertised as one of the most compelling tools in generating successful cartel investigations. Amnesty Plus is aimed at attracting amnesty applications by encouraging firms, convicted in one market, to report their collusive agreements in other markets. We show that Amnesty Plus has two opposite effects on firms' ability and incentives to collude which are both increasing in the fine reduction granted. First, Amnesty Plus can reduce the deterrence of cartel activities by making it easier for firms to sustain multimarket collusion through strategies involving self-reporting after a first cartel detection. Second, it can reduce the expected duration of cartels or delay their formation by increasing firms' incentives to self-report after a first cartel detection.
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Language
English
Keywords
Collusion
Amnesty Plus
Multimarket contact
Leniency program
HSG Classification
contribution to scientific community
Refereed
Yes
Publisher
Elsevier
Publisher place
Amsterdam
Volume
30
Number
6
Start page
624
End page
640
Pages
17
Subject(s)
Eprints ID
217627