Single- vs. Multi-Jurisdictional Leniency Policies: An Experiment

As multinational corporations have become more common, the need for a multi-jurisdictional leniency program that allows antitrust authorities to recognize leniency applications submitted to other antitrust authorities has recently emerged. This paper employs a laboratory experiment to examine how multi-jurisdictional leniency policies affect cartel formation, deterrence, and detection compared with a single-jurisdictional policy. The findings confirm the deterrent effect of leniency policies on cross-border cartels but show that multi-jurisdictional leniency does not necessarily increase leniency applications. In particular, when antitrust authorities do not mutually guarantee full immunity for firms that self-report to different authorities, self-reporting declines, decreasing cartel exposure and increasing the number of successful cartels that are formed but remain unexposed.