Lobbying and Cartel Enforcement
52 Pages Posted: 28 Mar 2022 Last revised: 27 Jul 2022
Date Written: July 18, 2022
This paper examines the effect of firms' lobbying activities on penalties received from public competition authorities. We first show that prosecuted firms tend to increase their lobbying expenditures when they are under investigation. In a following set of results, our estimates report that lobbying expenditures are negatively associated with the amount of the cartel sanction, across firms and within cartels. We also observe that cartel sanctions are more responsive to lobbying expenditures when (1) the head of the antitrust authority is appointed by a less conservative president and (2) the lobbying firm qualifies for the leniency program. Overall, our results appear consistent with the regulatory capture and the informational lobbying theories, with a stronger effect for the latter.
Keywords: Cartel, Lobbying, US Antitrust Division, Cartel Enforcement, Cartel Sanctions, Competition authorities
JEL Classification: D72, G28, K21
Suggested Citation: Suggested Citation