Leniency in exchange for cartel confessions
| Author | J.D. Jaspers |
| DOI | 10.1177/1477370819874432 |
| Published date | 01 January 2020 |
| Date | 01 January 2020 |
| Subject Matter | Articles |
https://doi.org/10.1177/1477370819874432
European Journal of Criminology
2020, Vol. 17(1) 106 –124
© The Author(s) 2019
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DOI: 10.1177/1477370819874432
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Leniency in exchange for
cartel confessions
J.D. Jaspers
Erasmus University Rotterdam, the Netherlands
Abstract
Leniency offers corporations the possibility to come clean about their involvement in cartel
conduct (for example, price-fixing, bid-rigging) in exchange for immunity or reduction of financial
penalties. In Europe, nearly 60 percent of detected cartels are discovered through leniency.
This makes leniency the most applied detection tool for uncovering cartel conduct violations.
What are the considerations in applying for leniency or refraining from doing so? How do those
considerations relate to private law enforcement through civil liability regarding business cartels?
These questions are discussed based on semi-structured interviews (n = 34) with cartelists,
competition lawyers and in-house legal counsel to study theoretical assumptions underpinning
leniency arrangements in the Netherlands. This study investigates four scenarios on the use of
leniency suggested in the literature and finds empirical support for only two. Strategic use of
leniency and false confessions occur in the Netherlands, but to a lesser extent than the existing
literature suggests. Moreover, various disincentives, and especially the rise of private enforcement,
make leniency an unattractive and uncertain option for cartelists.
Keywords
Business cartels, corporate crime, regulatory enforcement, whistle-blowing
Introduction
Cartel confessions are an essential source for competition authorities in uncovering
cartel conduct violations (for example, price-fixing, bid-rigging). Leniency offers
corporations the possibility to confess to their involvement in cartel conduct in
exchange for immunity or a reduction in financial penalties. In Europe, nearly 60
percent of detected cartel cases are discovered through leniency applications, making
it the most employed detection tool by competition authorities in uncovering cartels
(Carmeliet, 2012). Over the last decade, more than 50 jurisdictions worldwide have
adopted leniency arrangements in their competition and anti-cartel enforcement
Corresponding author:
J.D. Jaspers, Erasmus School of Law, Department of Criminology, Erasmus University Rotterdam,
Burgemeester Oudlaan 50, Rotterdam, 3000 DR, The Netherlands.
Email: jaspers@law.eur.nl
874432EUC0010.1177/1477370819874432European Journal of CriminologyJaspers
research-article2019
Article
Jaspers 107
policies (Beaton-Wells, 2015). Leniency arrangements contributed to the detection of
a substantial number of cartels across the globe. For example, owing to its amnesty
programme, the US Antitrust Division secured more fines in 1999 alone than the sum
of fines imposed under the Sherman Act since its adoption in 1890 (Aubert et al.,
2006). Leniency also triggered the largest financial penalties imposed by the European
Commission (for example, Vitamins, Auction Houses, Air Cargo) (see Carmeliet,
2012; Stephan and Nikpay, 2015). Recently, however, the number of leniency appli-
cations has declined worldwide, causing concern amongst experts about the depend-
ency of competition authorities on this detection tool (Guttuso, 2015; ICN, 2014).
Therefore it is important to understand more about the decision-making process and
motivations regarding leniency applications. This study contributes to that under-
standing by empirically investigating motivations and disincentives for leniency
applications. Does leniency work according to the theoretical assumptions underpin-
ning it or do cartelists use leniency strategically and, if so, to what extent?
Previous research has addressed these questions through economic modelling (see
Blum et al., 2008; Hinloopen, 2003; Hinloopen and Soetevent, 2008). This gives insight
into potential interactions of cartels with leniency and theoretical scenarios on strategic
use, but economic models lack empirical validation. Socio-legal scholars have conducted
empirical research through single case studies or systematic document analyses of
detected cartel cases (see Bergman and Sokol, 2015; Brenner, 2009; Stephan and Nikpay,
2015). Some studies also include interviews with cartelists, but these studies have not
specifically addressed leniency (see Parker, 2013). The most extensive study regarding
leniency is by Sokol (2012), who uses surveys and interviews amongst antitrust practi-
tioners in the US. Through his study, Sokol (2012) was the first to probe the assumptions
underpinning leniency by studying how leniency decision-making works in practice.
However, Sokol did not interview cartelists themselves and the study is US based only.
Although many studies have looked at the effectiveness of leniency, at optimal leniency
and some at leniency in legal practice, most of these studies are conducted in the US (see
Harrington, 2008; Sokol, 2012). It is known that the US antitrust policy is set in a more
adversarial legal system compared with European institutions (see Kagan, 2006).
Therefore, the findings of this research cannot be automatically generalized to the
European context. This study contributes to extant research by adding a case from a
European country and by adding first-hand experience from cartelists. Building on
insights from these earlier empirical studies, this study looks at the specific Dutch con-
text for leniency and investigates the theoretical assumptions behind leniency. The fol-
lowing questions are addressed: what are the considerations in applying for leniency or
refraining from doing so? How do those considerations relate to private enforcement of
business cartels? And to what extent do cartelists use leniency strategically? This article
aims to answer these questions through interviews with competition lawyers, in-house
legal counsel and cartelists in the Netherlands.
Theory: Assumptions underpinning leniency arrangements
Cartel agreements are based on mutual trust between cartelists. This trust entails the
willingness to make oneself vulnerable to the risk of betrayal by others in the cartel
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