Leniency programs, antitrust enforcement and multimarket contact : three essays in industrial organization

The Layout of My Thesis This thesis contains three chapters in Industrial Organization that build on the work outlined above. The first two chapters combine leniency programs with multimarket contact and provide a thorough analysis of the potential effects of Amnesty Plus and Penalty Plus. The third chapter puts the whole discussion on leniency programs into perspective by examining other enforcement tools available to an antitrust authority. The main argument in that last chapter is that a specific instrument can only be as effective as the policy in which it is embedded. It is therefore important for an antitrust authority to know how it best accompanies the introduction or modification of a policy instrument that helps deterrence. INTRODUCTION Chapter 1 examines the efféct of Amnesty Plus and Penalty Plus on the incentives of firms to report cartel activities. The main question is whether the inclusion of these policies in a leniency program undermine the effectiveness of the latter by discouraging the firms to apply for amnesty. The model is static and focus on the ex post incentives of firms to desist from collusion. The results suggest that, because Amnesty Plus and Penalty Plus encourage the reporting of a second cartel after a first detection, a firm, anticipating this, may be reluctant to seek leniency and to report in the first place. However, the effect may also go in the opposite direction, and Amnesty Plus and Penalty Plus may encourage the simultaneous reporting of two cartels. Chapter 2 takes this idea further to the stage of cartel formation. This chapter provides a complete characterization of the potential anticompetitive and procompetitive effects of Amnesty Plus in a infinitely repeated game framework when the firms use their multimarket contact to harshen punishment. I suggest a clear-cut policy rule that prevents potential adverse effects and thereby show that, if policy makers follow this rule, a leniency program with Amnesty Plus performs better than one without. Chapter 3 characterizes the socially optimal enforcement effort of an antitrust authority and shows how this effort changes with the introduction or modification of specific policy instruments. The intuition is that the policy instrument may increase the marginal benefit of conducting investigations. If this effect is strong enough, a more rigorous detection policy becomes socially desirable.

Evaluating antitrust leniency programs

This paper identifies and then quantifies econometrically the impact of leniency programs on the perception of the effectiveness of antitrust policies using country level panel data for a 10-year span. Leniency programs have been introduced gradually in antitrust legislation across the globe to fight more effectively against cartels. We use the dynamics of the diffusion of such policy innovation across countries and over time to evaluate the impact of the program. We find that leniency programs have had a significant impact on the perception among the business community of the effectiveness of each country‟s antitrust policy. Leniency programs have become weapons of mass dissuasion in the hands of antitrust enforcers against the more damaging forms of explicit collusion among rival firms in the market place.

Leniency - Kartellin ilmiantaminen ja seuraamusmaksusta vapautuminen tai sen alentaminen oikeustaloustieteellisestä näkökulmasta tarkasteltuna

The purpose of the study is to solve contents, functioning and potential improvements of European Union and Finlands leniency-system that is to say amnesty and reduction system from fines imposed from cartel activity. Law and economics was chosen as a research method, which has made possible to handle the subject in a comprehensive perspective. The study is based on literature, also legal cases, law and legislative history have been used as help. Leniency is a reasonably new system both in European Unions and in Finlands competition law. It makes possible to detect even secret cartels with the help of deterrent aimed at them. Companies experience the large amount of fines and the investigation concerning the cartel as big threats, therefore they all want to be the first one to report it in order to get full amnesty. However, this system needs improvements, for instance improving the transparency, unifying the European Unions leniency applications and finding answers to certain question concerning justice.

Disclosure of Leniency Materials: A Bridge between Public and Private Enforcement of Antitrust Law. Research Paper in Law 08/2013, December

The disclosure of leniency materials held by competition authorities has recently been under the spot. On the one hand, these documents could greatly help cartel victims to prove the damage and the causation link when filing damage actions against cartelists. On the other hand, future cartelists could be deterred from applying for leniency since damage actions could be brought as a result of the information submitted by themselves. Neither the current legislation nor the case law have attained yet to sufficiently clarify how to deal with this clash of interests. Our approach obviously attempts to strike a balance between both interests. But not only that. We see the current debate as a great opportunity to boost the private enforcement of antitrust law through the positive spillovers of leniency programmes. We hence propose to build a bridge between the public and the private enforcement by enabling a partial disclosure of the documents.

The dynamics of leniency application and the knock-on effect of cartel enforcement. Bruegel Working Paper 2016/02, February 2016

The authors study the timing of leniency applications using a novel application of multi-spell discrete-time survival analysis for a sample of cartels prosecuted by the European Commission between 1996 and 2014. The start of a Commission investigation does not affect the rate by which conspirators apply for leniency in the market investigated, but increases the rate of application in separate markets in which a conspirator in the investigated market also engaged in collusion. The revision of the Commission’s leniency programme in 2002 increased the rate of pre-investigation applications. Our results shed light on enforcement efforts against cartels and other forms of

Insiders´ views as a predictor of stock performance : can insider trading be used to predict stock performance on the United States stock market?

This thesis studies the possibility of using information on insiders’ transactions to forecast future stock returns after the implementation of Sarbanes Oxley Act in July 2003. Insider transactions between July 2003 and August 2009 are analysed with regression tests to identify the relationships between insiders’ transactions and future stock returns. This analysis is complemented with rudimentary bootstrapping procedures to verify the robustness of the findings. The underlying assumption of the thesis is that insiders constantly receive pieces of information that indicate future performance of the company. They may not be allowed to trade on large and tangible pieces of information but they can trade on accumulation of smaller, intangible pieces of information. Based on the analysis in the thesis insiders’ profits were found not to differ from the returns from broad stock index. However, their individual transactions were found to be linked to future stock returns. The initial model was found to be unstable but some of the predictive power could be sacrificed to achieve greater stability. Even after sacrificing some predictive power the relationship was significant enough to allow external investors to achieve abnormal profits after transaction costs and taxes. The thesis does not go into great detail about timing of transactions. Delay in publishing insiders’ transactions is not taken into account in the calculations and the closed windows are not studied in detail. The potential effects of these phenomena are looked into and they do not cause great changes in the findings. Additionally the remuneration policy of an insider or a company is not taken into account even though it most likely affects the trading patterns of insiders. Even with the limitations the findings offer promising opportunities for investors to improve their investment processes by incorporating additional information from insiders’ transaction into their decisions. The findings also raise questions on how insider trading should be regulated. Insiders achieve greater returns than other investors based on superior information. On the other hand, more efficient information transfer could warrant more lenient regulation. The fact that insiders’ returns are dominated by the large investment stake they maintain all the time in their own companies also speaks for more leniency. As Sarbanes Oxley Act considerably modified the insider trading landscape, this analysis provides information that has not been available before. The thesis also constitutes a thorough analysis of insider trading phenomenon which has previously been somewhat separated into several studies.

Editiovelvollisuus kilpailuoikeudellisissa vahingonkorvausoikeudenkäynneissä

Tutkielmassa tarkastellaan lainopillisesta näkökulmasta asiakirjojen esittämisvelvollisuutta kilpailuoikeudellisissa vahingonkorvausoikeudenkäynneissä. Kilpailunrajoituksesta vahinkoa kärsinyt on Euroopan unionin tuomioistuimen oikeuskäytännön mukaan oikeutettu vahingonkorvaukseen kärsimästään vahingosta. Vahingonkärsijä on kuitenkin kilpailunrajoitukseen osallistunutta heikommassa asemassa vahingonkorvausoikeudenkäynneissä, sillä olennainen todistusaineisto on usein toisen asianosaisen tai kolmannen osapuolen hallussa. Erityisesti kilpailuviranomaisen leniency-menettelyn kautta saamat asiakirjat sisältävät vahingonkärsijän kannalta merkityksellistä tietoa. Tämän vuoksi vahinkoa kärsineet pyrkivätkin saada tutustua leniency-hakemukseen ja sen liitteisiin, sillä asiakirjojen tiedot voivat helpottaa vahingon määrän ja sen syyyhteyden kilpailunrajoitukseen todistamista. Vahingonkärsijän halu tutustua näihin asiakirjoihin ja toisaalta leniency-hakijan tarve suojella antamiaan tietoja aiheuttavat jännitteen kilpailuoikeuden julkisoikeudellisen ja yksityisoikeudellisen täytäntöönpanon välille. Euroopan unioni hyväksyi marraskuussa 2014 kilpailuoikeudellisesta vahingonkorvauksesta annetun direktiivin, joka pyrkii poistamaan täytäntöönpanojärjestelmien välisen jännitteen ja yhteensovittamaan ne siten, että molempien tehokkuus voidaan taata. Tutkielmassa havainnoidaan direktiivin edellyttämää editiosääntelyä ja työ- ja elinkeinoministeriön asettaman työryhmän ehdotusta kilpailuoikeudellisista vahingonkorvauksista annettavaksi laiksi. Lisäksi tarkastellaan, miten direktiivin ja ehdotetun lain ratkaisuehdotukset vaikuttavat vahingonkärsijän oikeuteen saada korvausta ja pystyvätkö ne ratkaisemaan kilpailuoikeuden julkisoikeudellisen ja yksityisoikeudellisen täytäntöönpanon välisen jännitteen. Leniency-menettelyllä on suuri merkitys salaisten kartellien havaitsemisen kannalta, minkä vuoksi myös yksityisoikeudellisen täytäntöönpanon näkökulmasta on tärkeää, ettei menettelyn tehokkuutta vaaranneta. Direktiivi suojaa kilpailuviranomaisten leniency-menettelyn kautta saamia yrityslausuntoja pyrkien varmistamaan, että elinkeinonharjoittajat tekevät yhteistyötä kilpailuviranomaisten kanssa myös vastaisuudessa. Lisäksi direktiivi asettaa vähimmäistason jäsenvaltioiden kansallisille editiosäännöksille. Näin se pyrkii vahvistamaan vahingonkärsijöiden asemaa oikeudenkäynneissä ja parantamaan heidän mahdollisuuksiaan saada korvausta kilpailunrajoituk-sesta aiheutuneesta vahingosta. Direktiivin edellyttämä sääntely laajentaa vahingonkärsijän mahdollisuuksia tutustua olennaiseen aineistoon verrattuna Suomen tämänhetkiseen sääntelyyn sekä yleisen editiosääntelyn että Kilpailu- ja kuluttajaviraston leniency-asiakirjojen tutustumisoikeuden osalta.

L'erreur judiciaire : une démonstration difficile

"Mémoire présenté à la Faculté des études supérieures en vue de l'obtention du grade de Maîtrise en droit (L.L.M.)"

Recours au pouvoir discrétionnaire dans le cadre d’interventions en sécurité routière : pratiques des policiers de la Sûreté du Québec

Rapport de stage présenté à la Faculté des arts et des sciences en vue de l’obtention du grade de Maître ès sciences (M. Sc.) en criminologie

Soft budget constraints in a dynamic general equilibrium model

This paper considers an overlapping generations model in which capital investment is financed in a credit market with adverse selection. Lenders’ inability to commit ex-ante not to bailout ex-post, together with a wealthy position of entrepreneurs gives rise to the soft budget constraint syndrome, i.e. the absence of liquidation of poor performing firms on a regular basis. This problem arises endogenously as a result of the interaction between the economic behavior of agents, without relying on political economy explanations. We found the problem more binding along the business cycle, providing an explanation to creditors leniency during booms in some LatinAmerican countries in the late seventies and early nineties.

Information and punitiveness: trial reconstruction in Ireland

Purpose – The purpose of this paper is to report results from a rape trial reconstruction in Ireland. Design/methodology/approach – A studio audience of 100 members of the Irish public were selected to attend a TV programme by the Republic of Ireland’s national broadcasting organisation. This involved the examination of the sentencing of a rape case. The audience’s sentencing preferences were measured at the outset, when they had been given only summary information about the case, and later, when full details had been disclosed. Findings – Previous research examining changes in public attitudes to crime and punishment has shown that deliberation, including the provision of new information and discussion with others and experts, tends to decrease public punitiveness and increase public leniency towards sentencing. An experiment in Ireland, however, showed that providing information does not invariably and necessarily moderate punitive attitudes. This paper presents the results, and offers some explanations for the anomalous outcome. Research limitations/implications – The pre/post design, in which the audience served as their own controls, is a weak one, and participants may have responded to what they took to be the agenda of the producers. Due to the quality of the sample, the results may not be generalisable to the broader Irish population. Practical implications – Policy makers should recognise that the public is not uniformly punitive for all crimes. There is good research evidence to show that the apparent public appetite for tough punishment is illusory, and is a function of the way that polls measure public attitudes to punishment. Sentencers and those responsible for sentencing policy would benefit from a fuller understanding of the sorts of cases which illicit strong punitive responses from the public, and the reasons for this response. However any such understanding should not simply translate into responsiveness to the public’s punitive sentiments – where these exist. Innovative survey methods – like this experiment – which attempt to look beyond the top-of-the-head opinions by providing information and opportunities for deliberation should be welcomed and used more widely. Originality/value – There have been limited research studies which reports factors which may increase punitiveness through the provision of information and deliberation.

Cartel deterrence and settlements: the Brazilian experience

Settlements are an important part of a program of cartel deterrence, particularly when the likelihood of conviction and the litigation costs are higher. This type of negotiated procedure to reach finality is in essence complementary to the fully adversarial procedures associated to the trial by the administrative or judicial courts, and to other investigative instruments, such as the leniency agreement. The Brazilian experience provides some insights about the different models of direct settlement in cartel cases and the complex interaction among settlements, leniency agreements, and trial outcome. First, there is leeway for the complementary models of settlements, the first oriented mainly to increasing the likelihood of detection, and the second oriented to saving social costs of litigation. Second, the concern with the preservation of the demand for leniency agreements led the competition authority to restrict the use of settlements, which are effectively designed for the defendants that are likely guilty and give higher value to finality. The recent experience illustrates that the current settlement policy has not caused any adverse effect on leniency agreements, while reducing litigation costs and granting finality in some cases.

Uma análise da jurisprudência do CADE acerca dos cartéis na revenda de combustíveis

Esta monografia analisa as decisões do Conselho Administrativo de Defesa Econômica (Cade) acerca dos cartéis no setor de revenda de combustíveis, com o objetivo de identificar as características do referido setor que propiciam a formação de cartel, bem como verificar as provas utilizadas como fundamento nas decisões e a participação da Agência Nacional do Petróleo, Gás Natural e Combustível (ANP) na defesa da concorrência no setor. Para introduzir o tema, foram apresentados alguns conceitos relevantes, como “cartel”, “acordo de leniência”, e “termo de compromisso de cessação de conduta”. Em seguida, de modo a delimitar a competência de cada um dos órgãos atuantes no setor, foi realizada uma análise da divisão de competências entre o Cade e a ANP. Dentre os resultados obtidos através de pesquisa processual, com o objetivo de levantar os Processos Administrativos levados a julgamento perante o Cade, foi destacada e aprofundada a análise da participação de Sindicatos como sendo o principal agente na formação de cartéis envolvendo a revenda de combustíveis, os tipos de provas utilizadas nas decisões do órgão antitruste e a valoração dos estudos econômicos realizados pela ANP. A conclusão deste estudo demonstra que os altos números de denúncias envolvendo a prática de cartel no setor são fundadas em indícios insuficientes para uma possível condenação, pois o Cade tem decidido tais casos com base em estudos especializados e provas capazes de comprovar efetivamente a ocorrência de cartel.