The Ambivalent Effect of Antitrust Damages on Deterrence

By Miriam C. Buiten – 

When a cartel is revealed, cartel participants face substantial civil damages claims next to public fines. In Europe, the recent increase in private damages actions brought on the concern that the leniency program could become less attractive, since they shield firms only from public fines. At the same time, civil liability may help discourage cartels altogether by increasing the expected costs of colluding. This note discusses this ambivalent effect of antitrust damages actions. It considers how fines and damages compare for leniency applicants and non-cooperating firms in Europe and the U.S. Favoring successful leniency applicants for civil liability as well as for fines may help retain leniency incentives, but may be difficult to achieve when punitive damages are prohibited. Alternatively, individual sanctions might need to be considered in order to encourage leniency applications while promoting civil antitrust claims.

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