Cartels, Corporate Compliance and What Practitioners Really Think About Enforcement

40 Pages Posted: 7 Jun 2012

See all articles by D. Daniel Sokol

D. Daniel Sokol

USC Gould School of Law; USC Marshall School of Business

Date Written: June 6, 2012

Abstract

This article shows the limitations to the optimal deterrence-inspired cartel enforcement policy currently used by the Department of Justice Antitrust Division. This article employs both quantitative and qualitative survey evidence of cartel practitioners to shed light upon the realities of US cartel enforcement policy. The empirical evidence provided by the practitioner surveys challenges the traditional assumptions behind the success of the DOJ’s cartel program. Perhaps the most interesting finding is that firms regularly game the leniency program to punish their competitors. For various reasons, firms and the DOJ have strong incentives to settle rather than to litigate cases in which the legality of cartel conduct may be in doubt. The surveys also expose limitations to the optimal deterrence framework for firms and individuals regarding incentives and behavior. These findings suggest the need for an enforcement focus on sub-units within the firm as well as various processes to change behavior that would improve enforcement and deterrence. Finally, the surveys suggest certain structural limitations in organizational behavior within firms that have prevented antitrust compliance programs from becoming embedded in a way that would reduce cartel activity. Additionally, this article provides an analysis of media coverage of cartel enforcement from 1990-2009. The analysis suggests that successful enforcement has not created sufficient awareness of cartel behavior among the public. Relative to other types of financial crimes, such as accounting fraud, the public seems unaware or uninterested in cartel activity. The conclusion summarizes the article’s findings and outlines potential future steps in cartel research.

Keywords: cartels, leniency, practitioner surveys, optimal deterrence, competition law, antitrust, price fixing, corporate crime, organizational theory, compliance, corporate culture

JEL Classification: K21, L41, M14

Suggested Citation

Sokol, D. Daniel, Cartels, Corporate Compliance and What Practitioners Really Think About Enforcement (June 6, 2012). Antitrust Law Journal, Vol. 78, 2012, Available at SSRN: https://ssrn.com/abstract=2079336

D. Daniel Sokol (Contact Author)

USC Gould School of Law ( email )

699 Exposition Boulevard
Los Angeles, CA 90089
United States

USC Marshall School of Business ( email )

701 Exposition Blvd
Los Angeles, CA California 90089
United States

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