Competition Law Enforcement: The Free-Riding Plaintiff and Incentives for the Revelation of Private Information

Abstract

The past and current reluctance of firms and individuals to use private enforcement suggests that there are limited incentives for self-help. The key contribution of private enforcement to overall deterrence derives from cases which would not otherwise be brought, not simply because of resource constraints, but also because relevant information would not otherwise have come to light. In terms of revealing such private information, cases initiated and pursued by private litigants add much more to the equation than do cases merely following on from decisions made by competition authorities. In this paper we use a simple model to highlight what features of the private enforcement system promote and hamper the use of these two different types of private enforcement. A key finding is that to encourage new cases, it is essential that private enforcement is quicker than the time it takes to get a decision in a follow-on case.

Keywords: Private enforcement, litigation, deterrence, competition law

JEL Classification: K21, K13, K41