Excluding Ringleaders from Leniency Programs

Abstract:     
We analyze the impact of ringleader discrimination in leniency programs on the sustainability of collusion. An important role of leniency is to elicit cartel members’ evidence about collusive activity in order to increase the probability of convicting the cartel. We find that ringleader discrimination does not play a role when the ringleader’s relative amount of evidence is high as the collusive agreement will specify and compensate the ringleader to never blow the whistle in any case whereas ringleader discrimination has a pro-collusive (deterring) effect when the ringleader’s relative evidence is moderate (low). Furthermore, ringleader discrimination may deter collusion if the investigation probability of the antitrust authority is sufficiently high but not too high. In this case, the effect of asymmetry from exclusion — even if profits are redistributed — is stronger than the loss of ringleader evidence for conviction.

Number of Pages in PDF File: 33

Keywords: Cartel, collusion, leniency program, ringleader, whistle-blowing

JEL Classification: L40, L41

working papers series