Evaluating the Impact of Leniency Programs on Fines Imposed on Detected Price-Fixing Cartels

The most significant violation of antitrust law in industrial economics is cartel formation. A price-fixing cartel, as defined in Connor (2014), is “a voluntary association of legally independent firms that aims to raise their joint profits through explicit agreements.”1 From 1990-2016, combined gross cartel overcharges from across the globe exceeded $1.5 trillion USD, and almost 1400 international cartels were investigated or convicted (Connor, 2016). The primary way competition authorities have fought cartels in the past three decades is through the implementation of corporate leniency programs. Theseprograms offer reduced penalties or immunity to parties that supply information assisting with a cartel prosecution. While the goal of leniency programs is to reduce the number of cartels existing in the marketplace, their true impact is unknown because we only observe discovered cartels. Therefore, we must turn to economic analysis to try to understand their effectiveness