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Leniency programs for multimarket firms: The effect of Amnesty Plus on cartel formation

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  • Lefouili, Yassine
  • Roux, Catherine

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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Bibliographic Info

Article provided by Elsevier in its journal International Journal of Industrial Organization.

Volume (Year): 30 (2012)
Issue (Month): 6 ()
Pages: 624-640

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Handle: RePEc:eee:indorg:v:30:y:2012:i:6:p:624-640

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Web page: http://www.elsevier.com/locate/inca/505551

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Keywords: Collusion; Amnesty Plus; Multimarket contact; Leniency program;

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References

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  1. Apesteguia, Jose & Dufwenberg, Martin & Selten, Reinhard, 2003. "Blowing the Whistle," Research Papers in Economics 2003:5, Stockholm University, Department of Economics.
  2. Thomas, Charles J. & Willig, Robert D., 2006. "The risk of contagion from multimarket contact," International Journal of Industrial Organization, Elsevier, vol. 24(6), pages 1157-1184, November.
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  8. McCutcheon, Barbara, 1997. "Do Meetings in Smoke-Filled Rooms Facilitate Collusion?," Journal of Political Economy, University of Chicago Press, vol. 105(2), pages 330-50, April.
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  15. Choi, Jay Pil & Gerlach, Heiko, 2012. "Global cartels, leniency programs and international antitrust cooperation," International Journal of Industrial Organization, Elsevier, vol. 30(6), pages 528-540.
  16. Catherine Roux & Thomas von Ungern-Sternberg, 2007. "Leniency Programs in a Multimarket Setting: Amnesty Plus and Penalty Plus," CESifo Working Paper Series 1995, CESifo Group Munich.
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Cited by:
  1. Jay Pil Choi & Heiko Gerlach, 2012. "International Antitrust Enforcement And Multimarket Contact," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 53(2), pages 635-658, 05.
  2. Dennis Sánchez Navarro, 2013. "Eficacia y asimetrías de los programas de delación en un contexto multimercado: un análisis del caso colombiano en el marco del TLC con Estados Unidos," ESTUDIOS ECONÓMICOS SIC 010905, SUPERINTENDENCIA DE INDUSTRIA Y COMERCIO.
  3. Jay Pil Choi & Heiko Gerlach, 2010. "Global Cartels, Leniency Programs and International Antitrust Cooperation," CESifo Working Paper Series 3005, CESifo Group Munich.
  4. Natalia Pavlova & Andrey Shastitko, 2014. "Effects Of Hostility Tradition In Antitrust: Leniency Programs And Cooperation Agreements," HSE Working papers WP BRP 58/EC/2014, National Research University Higher School of Economics.
  5. Sánchez Navarro, Dennis, 2013. "Eficacia y asimetrías de los programas de delación en un contexto multi-mercado: un análisis del caso colombiano en el marco del TLC con Estados Unidos
    [Efficacy and asymmetries of the leniency
    ," MPRA Paper 48699, University Library of Munich, Germany.

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