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Should cartel sanctions be reduced in case the offender runs a corporate compliance program?

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  • Morell, Alexander

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.

Suggested Citation

  • Morell, Alexander, 2024. "Should cartel sanctions be reduced in case the offender runs a corporate compliance program?," SAFE Working Paper Series 435, Leibniz Institute for Financial Research SAFE.
    • Handle: RePEc:zbw:safewp:306362
    DOI: 10.2139/ssrn.5005778
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Corporate compliance programs; leniency programs; antitrust sanctioning; corporate governance;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices

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