An Empirical Assessment Of The European Leniency Notice

A study of the Directorate General for Competition's (DG Competition) 1996 “Notice on the non-imposition or reduction of fines in cartel cases” suggests that it largely failed to induce members of active cartels to self-report. Instead, immunity and fine discounts were predominantly awarded in cases where cartels were failing, or had already failed. A majority of leniency cases followed (or were broadly contemporaneous to) equivalent investigations by the U.S. Department of Justice. All but one EU only leniency case had failed before self-reporting occurred. Moreover, nearly half of leniency cases concerned closely related infringements in the chemicals industry. The majority of those U.S.–EU leniency cases had failed (or were failing) at the time of self-reporting. A preliminary analysis of the revised 2002 notice suggests less reliance on U.S. successes, but still more cartels connected to previous infringements in the chemicals industry. A central challenge is preventing the leniency program from providing a way for failed cartelists to tame the end game, or to use leniency as a strategic tool to put former cartel members (now competitors once more) at a disadvantage. Such cases risk overwhelming DG Competition with leniency applications that do little to enhance deterrence.