Leniency and Damages: Where Is the Conflict?

Damage actions may reduce leniency programs’ attractiveness for cartel participants if their cooperation with the competition authority increases the chance that the cartel’s victims will sue them. This apparent conflict between public and private antitrust enforcement led to calls for a legal compromise. We show that the conflict is due to the legislation, and a compromise is not required: limiting the victims’ ability to recover their losses is not necessary to preserve the effectiveness of leniency programs and may be counterproductive. We show that damage actions will improve their effectiveness if the civil liability of the immunity recipient is minimized and full access to all evidence collected by the competition authority is granted to claimants. Our results help compare the EU and US damage systems and directly question the 2014 EU directive that tries to protect leniency programs’ effectiveness by restricting access to leniency statements in subsequent damage actions.

Non c’è da raccontare storie, serve una storia! Intese per oggetto e analisi economica

La LCN commenta la recente sentenza con cui il Tribunale Amministrativo Regionale del Lazio ha accolto il ricorso di UnipolSai contro il Provvedimento n. 25382 dell’Autorità Garante della Concorrenza e del Mercato.

La LCN si focalizza su due dei principi enunciati nella sentenza, quello della congruenza narrativa dell’ipotesi collusiva e quello della astratta idoneità dell’accordo a conseguire un risultato di alterazione della concorrenza.

Statistical significance and the standard of proof in antitrust damage quantification

Econometric techniques can play an important role in damage quantification cases regarding breaches of antitrust law. In this short note, starting from a prima facie simple convention on how to interpret the estimated regression coefficients, we will discuss how a deep understanding of both the specific legal framework and the relevant technical aspects is important in order to evaluate econometric evidence correctly in the context of civil court litigation for antitrust damage quantification.

Price Relationship Agreements: economic analysis and implications for competition

Price Relationship Agreements (PRAs) are agreements linking one supplier’s price to those charged to other customers or by competitors. Firms adopt PRAs for many different reasons and the competitive effects of these agreements may vary substantially. This note summarizes the main findings of a comprehensive literature review of PRAs, bringing together different economic theories of harm and efficiency motivations, and provides some policy implications.

The Enforcement of Imperfect Rules

This paper examines the optimal sanction for rules that are imperfect in that they are either overinclusive, as they prohibit an action that in some circumstances is beneficial, or underinclusive as they allow agents to undertake alternative conducts that are harmful, or both. The paper clarifies why this notion of imperfection divers from the notion of over- and underdeterrence and from that of legal errors. Finally it shows that when rules are imperfect the optimal sanction is lower than the optimal sanction for a perfect rule, both if the rule is overinclusive and if it is underinclusive.

Deterrence in Competition Law

This paper provides a comprehensive discussion of the deterrence properties of a competition policy regime. On the basis of the economic theory of law enforcement we identify several factors that are likely to affect its degree of deterrence: 1) sanctions and damages; 2) financial and human resources; 3) powers during the investigation; 4) quality of the law; 5) separation of power. We then discuss how to measure deterrence. We review independence and 6) the literature that uses surveys to solicit direct information on changes in the behavior of firms due to the threats posed by the enforcement of antitrust rules, and the literature based on the analysis of hard data. We finally argue that the most challenging task, both theoretically and empirically, is how to distinguish between “good” deterrence and “bad” deterrence.

Gesy- Discussion Paper n.285

Leniency policies and illegal transactions

We study the consequences of leniency—reduced legal sanctions for wrongdoers who spontaneously self-report to law enforcers—on sequential, bilateral, illegal transactions, such as corruption, manager–auditor collusion, or drug deals. It is known that leniency helps deterring illegal relationships sustained by repeated interaction. Here we find that—when not properly designed—leniency may simultaneously provide an effective governance mechanism for occasional sequential illegal transactions that would not be feasible in its absence.

Corporate Governance and Collusive Behavior

Antitrust authorities often consider parallel pricing and market share stability to be clues of illegal collusion. To analyze whether this inference is correct, I develop a model of price competition with differentiated products in which demand and costs vary over time. In many cases parallel pricing does not distinguish between a competitive and a collusive outcome. However, in some cases perfect parallel pricing is compatible only with a competitive equilibrium, and therefore provides some evidence that firms did not collude. I also show that the competitive equilibrium is characterized by a higher market share stability than a collusive equilibrium.

Published in Review of Law & Economics: Vol. 2: No. 1, Article 5. (July 2006)

Does Parallel Behavior Provide Some Evidence of Collusion?

Published in Review of Law & Economics: Vol. 2: No. 1, Article 5. (July 2006).

Optimal Fines in the Era of Whisteblowers. Should Price Fixers still Go to Prison?

We review current methods for calculating fines against cartels in the US and EU, and simulate their deterennce effects under different assumptions on the legal and economic environment. It is likely that European fines have not had significant deterrence effects before leniency programs were introduced. Previous simulations of the effects of fines ignore the different type of deterrence that leniency programs bring about, and, therefore, grossly overstate the minimum fine likely to have deterrence effects falls to extremely low levels (below 10% of the optimal “Beckerian” fine). Strategic judgement can and should be prevented by suitable regulation or extended liability. Criminal sanctions, in the form of the imprisonment, certainly bring benefits (and costs) in terms of cartel deterrence, but the firms’ limited ability to pay does not appear any longer such a strong argument for their introduction.