Excluding Ringleaders from Leniency Programs

33 Pages Posted: 14 Feb 2009 Last revised: 26 Apr 2012

Jesko Herre

University of Cologne

Wanda Mimra

ETH Zürich - CER-ETH - Center of Economic Research at ETH Zurich

Alexander Rasch

University of Cologne

Date Written: April 1, 2012

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.

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

JEL Classification: L40, L41

Suggested Citation

Herre, Jesko and Mimra, Wanda and Rasch, Alexander, Excluding Ringleaders from Leniency Programs (April 1, 2012). Available at SSRN: https://ssrn.com/abstract=1342549 or http://dx.doi.org/10.2139/ssrn.1342549

Jesko Herre

University of Cologne ( email )

Albertus-Magnus-Platz
Cologne, 50923
Germany

Wanda Mimra (Contact Author)

ETH Zürich - CER-ETH - Center of Economic Research at ETH Zurich ( email )

Zürichbergstrasse 18
Zurich, 8092
Switzerland

Alexander Rasch

University of Cologne ( email )

Albertus-Magnus-Platz
Cologne, 50923
Germany

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