Incentivizing Private Antitrust Enforcement to Promote Leniency Applications: Experimental Evidence

Project: Research

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Description

In the field of antitrust, there are different kinds of anti-competitive behaviors. Among all these behaviors, the most severe ones are hardcore cartels (also known as cartels). Cartels are conducted secretly and hard to detect. Societies rely on two essential procedural devices to detect and combat cartels - private enforcement and leniency programs. On the one hand, private enforcement involves the victims of competition law violations bringing lawsuits against cartels. On the other hand, leniency programs provide leniency, such as full immunity or reduction of fines, to the cartel members who are the first ones to blow the whistle on their cartel to antitrust authorities. Many jurisdictions around the world are promoting private antitrust enforcement. However, currently, the dominant view is that private actions discourage leniency applications, an important source for antitrust authorities to detect and combat cartels. Such a view hinders the development of private enforcement. In a separate theoretical work, based on a game theory model created by Professor Joseph E. Harrington, I revealed that private enforcement does not always negatively impact leniency application. Further, I argued that, instead, private enforcement, when used “properly,” could serve as a tool to promote leniency application. The current project aims to offer empirical evidence to support this theoretical study. To this end, I propose a randomized control experiment on 336 eligible students. These student participants will be randomly assigned to five treatment groups and two control groups to test five hypotheses: (1) incentivizing follow-on actions resulting from leniency applications discourages leniency applications, (2) incentivizing follow-on actions that do NOT result from leniency applications promotes leniency applications, (3) incentivizing standalone actions encourages leniency applications, (4) incentivizing all victims to sue proportionally discourages leniency applications if victims do NOT always bring follow-on actions that result from leniency applications and (5) incentivizing all victims to sue proportionally promotes leniency applications if victims always bring follow-on actions that result from leniency applications. Such empirical evidence could be used to persuade lawmakers and antitrust authorities to adopt my proposal and use private antitrust enforcement as a tool to promote leniency applications. As such, societies could capture the benefits of having more private actions and leniency applications at the same time.

Detail(s)

Project number9048258
Grant typeECS
StatusNot started
Effective start/end date1/01/23 → …