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Marcelo Calliari, Sep 16, 2015
What change a decade brings. Ten years ago the calls for a spread of leniency policies were undisputed. Their success in detecting cartels in a few jurisdictions, notably the United States and the European Union, seemed to justify the expectation that their adoption by more and more countries would only improve enforcement and desincentivize cartels worldwide. A little less undisputed, but with similar claims of increased deterrence, the call for criminalization was also spreading and the discussion on pros and cons of including this weapon in the anticartel arsenal grew and spread.
The success of those evangelizing movements is reflected in the increased number of jurisdictions that have adopted criminal provisions, and the much larger number of those that have introduced leniency programs. It should therefore be somewhat surprising to see that pari passu with the trend, when defenders of these developments should be celebrating, the debate has shifted somewhat to ponder whether we have gone too far, and whether the risk today is that leniency itself may be disincentivized by the growing complexity, uncertainty, and cost associated with its dissemination.
There are many reasons for this shift in the leniency debate and this publication will explore several of them. This paper will focus on only one, that of criminalization of cartel enforcement and its impacts on the incentives for leniency. As most countries that have contemplated criminalizing cartels will attest, this is a challenging enterprise that increases the level of complexity in the system—and could therefore increase the risk and reduce predictability for potential cooperators. The counter-bet is obviously that the added deterrence effect will more than outweigh those negative impacts.
In this debate, Brazil may offer a very interesting practical example of the effects to leniency caused by criminal enforcement, and it serves as a real life experiment of how positive and negative incentives interplay. It also serves as a sobering reminder both of the imperative of carefully planning and designing a proper institutional and legal framework for criminalization, and of the likelihood that unexpected developments will happen anyway, challenging the authorities to adjust in a way that will protect leniency.