Carlos Mena-Labarthe, Mar 13, 2012
It is a common place nowadays to say that antitrust authorities have relied significantly (or over relied) on leniency applications to detect cartels. Some intend this as a criticism; others intend this as recognition of the strategy. Indeed, evidence shows leniency has been the most useful tool for cartel detection and it has been one of the great success stories in cartel enforcement in various jurisdictions. It is without a doubt one of the most important institutional exports of the United States and it is only beginning to take off.
According to the International Competition Network, an international body devoted to competition law enforcement of which members represent national and multinational competition authorities, during the last two decades leniency programs were adopted in more than 50 jurisdictions. This has transformed the way competition law is enforced in those jurisdictions, but also how competition authorities work and coordinate with each other as they have created a race to disclose illegal conduct by the participants of the cartel, nationally and internationally. Nowadays, companies and their counsel coordinate leniency applications all around the world and competition authorities coordinate their enforcement.
In Mexico, as in other parts of the world, we regard leniency as one of the most important and useful tools for the detection and prosecution of cartels.
Leniency programs may have some effects that need to be addressed by the authorities and this is where screens take such an important role. Leniency programs only work when you have severe sanctions including individual accountability, a good track record of enforcement and of course when you discover conspiracies without the use of leniency as well.
So, as various studies have documented in many interesting studies, despite the considerable success of leniency, some collusion remains undetected. And it may be true that this undetected collusion may be the worst, as it is still an on-going cartel that may still harm consumers for many years to come.
I recognize the great value of multiple approaches to detection and how authorities need to work in ex-officio detection as well.
Historically, but nowadays even more so, most competition authorities have started to search for alternative and complementary approaches to detect and investigate cartels; this is very important and should be given priority, especially in agencies and jurisdictions where cartel enforcement has over relied on leniency applications for detection.
There are many routes and efforts being explored. Some jurisdictions are working to promote complaints, extracting information from other cases, working with procurement officials and other enforcement agencies, even some countries are paying whistle-blowers for information.
One interesting method that has been advocated by many economists as well as some officers and legal consultants has been the use of empirical methods commonly known as screens.
As experience has proved, screens have flagged unusual patterns in a variety of countries and industries, and helped in the detection of cartels.
These empirical methods have their pros and cons. There have been great success stories, as well as some important waste of resources and never ending work to find a needle in a haystack where ultimately there is none.
In the Mexican experience, the Mexican Competition Commission has made some efforts to use screening to detect collusion and to prioritize investigation resources.
These efforts of course do not mean we have relied less on leniency in Mexico. Since 2006 when the program was introduced, it has been one of the top priorities of the Cartel Investigations Division. Accordingly, we believe advancing both efforts are complimentary and should not be seen as unrelated or contraries.