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Impact of Leniency Programs and Follow-on Damages on Cartel Deterrence

Author

Listed:
  • Karine Brisset

    (Université Marie et Louis Pasteur, CRESE UR3190, F-25000 Besançon, France)

  • Emmanuel Peterlé

    (Université Marie et Louis Pasteur, CRESE UR3190, F-25000 Besançon, France)

Abstract

Leniency programs encourage corporate cooperation with antitrust authorities by offering immunity or fine reductions for reporting illegal cartels. While prior studies suggest these programs discourage collusion and destabilize existing cartels, experimental evidence in environments with unrestricted communication indicates that the effectiveness of leniency is not clear-cut. We conduct a laboratory experiment in such an environment to examine the interaction between leniency programs and follow-on private damages, proposing the use of Fair Funds to maintain victim compensation and preserve incentives for leniency application. Contrary to theoretical predictions, we find that the prospect of private damages can increase cartel formation, though this effect is mitigated when our Fair Funds compensation scheme is introduced. In addition, leniency applications decline when private damages are introduced, but this decline is partially offset by the presence of Fair Funds.

Suggested Citation

  • Karine Brisset & Emmanuel Peterlé, 2025. "Impact of Leniency Programs and Follow-on Damages on Cartel Deterrence," Working Papers 2025-12, CRESE.
    • Handle: RePEc:crb:wpaper:2025-12
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    File URL: https://crese.univ-fcomte.fr/wp-content/uploads/2025/10/WP-2025-12.pdf
    File Function: First version, 2025
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    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices

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