Testing the Effectiveness of Immunity Policies for Cartel Conduct: Reflections and Proposals

Abstract

Immunity policies are widely regarded as having revolutionised cartel law enforcement. However, relatively little attention has been paid to testing their effectiveness in practice. Drawing on the experience with the Australian Competition and Consumer Commission’s Immunity Policy for Cartel Conduct as a case study, this chapter examines a range of approaches to immunity policy effectiveness-testing and analyses the insights available from each of them. The chapter considers the extent to which effectiveness can be tested having regard to the extent to which an immunity policy adheres to generally accepted criteria for an effective immunity policy (namely, severe sanctions, fear of detection and transparency and predictability). It explores various approaches to assessing the effectiveness of an immunity policy in achieving its stated objectives of increased detection, prosecution and deterrence of cartel activity. It also examines effectiveness from a broader perspective, having regard to the immunity policy’s interaction with other aspects of the overall system for enforcement and compliance and the degree to which the policy is consistent with the competition authority’s institutional values. The insights derived from this Australian research are relevant for the approach taken to effectiveness-testing of immunity policies world-wide.

Keywords: cartel, immunity policy

JEL Classification: K21