Too Much of a Good Thing?: Is Heavy Reliance on Leniency Eroding Cartel Enforcement in the United States?

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Megan Dixon, Ethan Kate, Janet McDavid, Feb 26, 2014

The United States Department of Justice Antitrust Division’s leniency program has seen unparalleled success over the past two decades as one of the most effective law enforcement tools available to identify and prosecute international cartels. Leniency has been the key driver in facilitating the Division’s takedown of cartels of a magnitude and longevity previously not contemplated by most in the competition field.

Twenty years into its regular use of this powerful tool, however, questions have begun to emerge about whether the Division is relying too heavily on the leniency program, to the detriment of some of its overall enforcement goals. Does dependence on leniency as the cornerstone of one’s regime have unforeseen or, at least, undesirable consequences? Should leniency programs play different roles in emerging, established, and sophisticated regimes? Has the success of the leniency program become a bit of crutch? Has the Division’s seeming obsession with ever-increasing statistics on the number of dollars fined or of foreign nationals jailed caused it to lose sight of some other important goals? Is it time for the Division to assess critically whether a larger percentage of its resources should be devoted to attempting to detect and prosecute violations that come to its attention via other avenues such as targeted community outreach and econometric market analysis?

Answers to these questions may depend, to some extent, on what you believe makes a cartel enforcement program successful. It seems fair to say that the Antitrust Division has taken the position that Big Is Good. And we wholeheartedly agree that it is in large part the shocking size-in every respect-of some of the cartels prosecuted as a result of the leniency program that have made the U.S. enforcers world leaders in competition policy, and that significantly changed the face of global cartel enforcement just as the “global economy” became a reality.

It is hardly surprising that combining an extremely successful and highly visible program with dwindling resources has led the division to rely heavily on the leniency program over the past couple of decades, and thus its focus on massive international cartels brought in through the leniency program has also made sense. That focus brought significant attention to the harms caused by cartels, thereby propelling cartel enforcement into a previously unknown world spotlight. And, unquestionably, in a gross economic sense blockbuster cartels do more harm than smaller, domestic cartels do.

But we are not convinced that at this point in the U.S. regime’s development, the Division should continue to focus the vast majority of its resources on these blockbuster cartels. We are not unaware of, or unsympathetic to, the severe resource constraints the Division currently faces, nor do we suggest that the Division has not pursued and had impressive success outside the leniency-generated blockbuster cartel space. We are simply suggesting that it may be time to take a fresh look and potentially reallocate some scarce resources to other components of the U.S. competition enforcement program.