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