Should Cartel Sanctions Be Reduced in Case the Offender Runs a Corporate Compliance Program?

24 Pages Posted: 31 Oct 2024 Last revised: 1 Nov 2024

See all articles by Alexander Morell

Alexander Morell

Goethe University Frankfurt - Faculty of Law; Leibniz Institute for Financial Research SAFE

Date Written: October 31, 2024

Abstract

A bonus on the fine in response to the defendant running a corporate compliance program is superfluous because working leniency programs provide all the incentives necessary to implement efficient compliance. Others opposed to such a bonus argue that unreduced fines are sufficient to incentivize the adoption of effective corporate compliance programs. Proponents, on the other hand, argue that a reduction in fines conditional on running a corporate compliance program incentivizes more investments in compliance. Both arguments are incomplete. It is true that, generally, sanctions alone provide only suboptimal incentives to invest in compliance because some compliance investments (those in detecting infringements, i.e., "policing") can increase the detection probability for cartels that remain. However, leniency programs provide an additional incentive to invest in compliance to find cartels in-house as all cartelists strive for being the first to report. Comparing the two effects shows that under plausible assumptions the latter dominates, rendering a bonus on the fine superfluous.

Keywords: Corporate Compliance Programs, Leniency Programs, Antitrust Sanctioning, Corporate Governance

JEL Classification: G34, L22, L41

Suggested Citation

Morell, Alexander, Should Cartel Sanctions Be Reduced in Case the Offender Runs a Corporate Compliance Program? (October 31, 2024). SAFE Working Paper No. 435, Available at SSRN: https://ssrn.com/abstract=5005778 or http://dx.doi.org/10.2139/ssrn.5005778

Alexander Morell (Contact Author)

Goethe University Frankfurt - Faculty of Law ( email )

Frankfurt
Germany

Leibniz Institute for Financial Research SAFE ( email )

House of Finance
Theodor-W.-Adorno-Platz 3
Frankfurt, 60323
Germany

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