How Effective Were Leniency Programs Globally?

HKUST IEMS Thought Leadership Brief No. 47


Alminas Zaldokas

Antitrust leniency programs allow the courts and/ or regulators to grant full or partial immunity to companies that participated in illegal cartels but cooperated in providing information about the cartel. Antitrust lawyers have been considering them among the most significant developments in cartel detection and deterrence. Our research finds that leniency program passage around the world led to more cartel detections and lower profitability margins of affected firms and thereby likely improved consumer welfare. However, when firms face new regulatory barriers to cartel formation, they acquire other firms and these mergers have a negative effect on customer firms’ stock prices, thus mitigating the effectiveness of leniency programs. These findings imply that anti-collusion enforcement may be effective only when coupled with a strong merger review process, providing implications that emerging market institutions pondering optimal antitrust enforcement should consider both antitrust infringements in unison.


About the authors

Alminas Žaldokas is an Associate Professor of Finance at Hong Kong University of Science and Technology. He is also a Faculty Associate at HKUST IEMS. More >> 

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