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See version in english Anti-Cartel Enforcement in a Contemporary Age. The Leniency Religion, Caron BEATON-WELLS, Christopher TRAN (dir.)

LIVRES : BEATON-WELLS Caron, TRAN Christopher (dir.), Hart Studies in Competition Law, Hart Publishing, Oxford, 2015, 330 p.

Anti-Cartel Enforcement in a Contemporary Age. The Leniency Religion, Caron BEATON-WELLS, Christopher TRAN (dir.)

Caron Beaton-Wells, Christopher Tran

Cette rubrique recense et commente les ouvrages et autres publications en droit de la concurrence, droit & économie de la concurrence et en droit de la régulation. Une telle recension ne peut par nature être exhaustive et se limite donc à présenter quelques publications récentes dans ces matières. Auteurs et éditeurs peuvent envoyer les ouvrages à l’intention du responsable de cette rubrique :

In the last decade, international community has experienced a significant spread of leniency programmes. Following the reported perceived successes of leniency programmes in the US and later also in the EU, over 50 jurisdictions introduced some form of leniency to their enforcement toolboxes. The broad and almost unquestioning embracement of this US legal innovation, with so many adherents especially among the competition authorities’ officials, is rather unprecedented. This new “leniency religion” is potentially problematic. Preaching effectiveness without carefully investigating actual effects, or without assessing the interrelationships with an impact on other elements in the enforcement toolbox, runs the risk of misjudged overreliance on leniency with possible adverse effects on the whole enforcement system. Anti-Cartel Enforcement in a Contemporary Age. The Leniency Religion—a forthcoming collection edited by Caron Beaton-Wells and Christopher Tran—makes an important and original contribution to the existing scholarship by reflecting on the experience with leniency programmes to date and by engaging in a multifaceted critique, challenging our thinking about leniency.

This is a tenth volume in Hart’s Studies in Competition Law. It is composed of an introduction and fifteen substantive contributions, which address various aspects of leniency programmes’ operation, their place in and impact on the broader enforcement regime. The collection had five principal aims : (1) to map out the origins and evolution of leniency over the last two decades ; (2) to identify challenges and opportunities presented by the proliferation of leniency programmes, as well as the extent to which there is a real convergence between them ; (3) to present the main lessons relating to the impact and effectiveness of leniency from different stakeholders’ perspectives ; (4) to examine how far the theories supporting leniency are reflected in practice ; and finally (5) to critically explore some of the less analysed aspects of leniency. These goals are pursued by an international team of leading contributors with different standpoints and experience gained in agencies, private practice, and academia. The editors did a very good job not only in selecting contributions, but also by facilitating linkages between them. Readers interested in a specific issue will be able to find cross-references to the same matter discussed from various perspectives in different chapters, making it very easy to navigate throughout the book. This review highlights some of the contributions.

The one of the two dominant themes of the volume deals with leniency stakeholders. The reader will find here eight contributions which provide different perspectives of competition authority, the firm, as well as of an individual. The discussion shows that the realities of leniency policies differ greatly from the underlying models and theoretical assumptions. For example, in chapter 4—entitled What Do We Know about the Effectiveness of Leniency Policy ? A Survey of the Empirical and Experimental Evidence—Catrina Marvão and Giancarlo Spagnolo analyse available studies in order to establish whether existing evidence supports the claim that leniency improves detection, prosecution and deterrence of cartels. They find that there is no sufficient empirical evidence to establish that leniency does more than just making the work of competition agencies easier. Moreover, the experimental literature suggests that poorly designed leniency programmes are most likely to be exploited by cartelists, for example to punish deviations from the cartel behaviour.

The possibility of gaming leniency is also raised by Leslie Marks and Claudio Mezzetti, in chapter 6, entitled Leniency Profiling and Reverse Profiling in Multi-Product Markets : Strategic Challenges for Competition Authorities. Marks and Mezzetti argue that reverse-profiling—unlike commonly believed—in certain settings incentivises multi-product firms to apply for leniency. In more general terms, they underline that firms act strategically also when considering leniency applications, underscoring the need for careful policy design.

William Kovacic, a former Commissioner at the US Federal Trade Commission, in his contribution entitled A Case for Capping the Dosage : Leniency Policy and Agency Governance (chapter 7), forewarns about the side-effects of overreliance on leniency programmes. He identifies the two key dangers. First, overreliance on leniency reinforces the unrealistic trend to present and treat the imposed fines and jail sentences as proxies of competition agencies’ effectiveness. Kovacic reminds that the chief functions of an agency are to “achieve greater compliance with the law and to deter violations,” not proving that the government is “getting good value for every dollar spent on competition law enforcement.” Second, Kovacic underscores the adaptability and creativity of cartelists, cautioning that they may be using leniency for their own ends. He calls for a policy-mix, which would reflect the changing nature of cartel conduct.

In chapter 8—Leniency Decision-Marking from a Corporate Perspective : Complex Realities’—Andreas Stephan and Ali Nikpay examine the key theoretical underpinnings of leniency policies. They analyse to what extent firms can be presumed to rationally analyse their options—to weight costs and benefits of applying for leniency. The reader is reminded that cartels are usually organised by firms’ employees, often at different levels of an organisation, for whom the prospects of fines imposed on their employer are unlikely to have a deterring effect, since by the time the fine is imposed the employees involved may well work elsewhere. Analysing the leniency’s disruptive force, the authors draw attention to the data relating to the European Commission’s cartel cases, which shows that that majority of cartels investigated thanks to leniency concerned agreements which ceased to exist before they were reported. This questions leniency’s ability to destabilise active cartels and suggests that leniency applications may be used strategically to game co-cartelists and gain an advantage over them. Stephan and Nikpay also question whether there really is a “race” to report cartels to competition authorities. In this context, they explain how complex and embedded in uncertainty the decision to cooperate with authorities can be.

Maurice E. Stucke, in chapter 11—Leniency, Whistle-Blowing and the Individual : Should We Create another Race to the Competition Agency ?—looks at leniency from the perspective of an individual. He notes that leniency policies in some jurisdictions aim not only to create a race between cartelists, but also between firms and their employees, involved in cartel’s operation (the culpable individuals). The available data does not prove the sufficient deterrence of both (corporate and individual) leniency programmes. Stucke seconds the calls for encouraging another race—between cartelists and individual outsider-whistle-blowers, who themselves did not partake in cartel’s operations (the non-culpable individuals), also by offering bounty payments to whistle-blowers. While not problem-free, such bounties are an interesting instrument and have been introduced in a number of jurisdictions across the globe. Stucke also underscores the importance of understanding the wider considerations motivating whistle-blowers. The available evidence does not establish that financial incentives are the prime motive for blowing the whistle. In particular, whistle-blowing is more likely if cartels are perceived as morally wrong. This suggests that more work is needed on the advocacy front—to underscore the moral wrongfulness of cartels and their detrimental effects.

The second dominant thread of the volume is the examination of the interactions between leniency programmes and other aspects of the competition law enforcement system. The reader will find here five chapters dealing with criminal sanctions, compensation, and compliance. For example, Christopher Harding, Caron Beaton-Wells and Jennifer Edwards, in chapter 12—Leniency and Criminal Sanctions in Anti-Cartel Enforcement : Happily Married or Uneasy Bedfellow ?—address the uneasy relationship between leniency programmes and criminal sanctions for cartel activity. This is a very topical issue given the growing trend towards criminalisation, which develops in parallel and in relation to the international spread of leniency programmes. The relationship between leniency and criminalisation raises the question whether introduction of criminal sanctions is being dictated by normative or instrumental considerations, and the authors critically explore these possibilities. They also scrutinise the “fragile” justifications for criminalising only certain types of cartel conduct (and not others, such as export cartels or some other forms of horizontal agreements), the possibility of leniency’s reinforcing morally reproachable conduct (by rewarding “cheating” and deception), or the possibility of leniency being gamed by cartelists. In the latter regard, leniency is considered as a “business opportunity” with a number of possible hypothetical “gaming” scenarios (for example, using of leniency to gain competitive advantage over competitors with which the firm entered into a cartel, or to “jam the process” by “sacrificing” a less important cartel in order to divert competition authority’s attention and resources from firm’s participation in a more significant conspiracy). The analysis of the tensions between leniency and criminalisation clearly shows that these are not “easy bedfellows.”

Howard Bergman and D. Daniel Sokol, in chapter 15 entitled The Air Cargo Cartel : Lessons from Compliance, provide a case study based on the Lufthansa’s experience—a firm which reported its participation in the air cargo price-fixing, one of the largest cartels uncovered to date. The authors show how compliance programmes can support leniency. They reveal the internal dynamics—from the creation of a compliance programme, over its implementation and in-house cartel’s discovery, to applying for leniency and a post-investigation response. The authors underline the importance of building an internal, compliance-oriented and open business culture—supported by the top-management, as well as the necessary alignment of incentives (so that firm’s employees know that engaging in anticompetitive conduct will have negative consequences for them). Bergman and Sokol identify further ingredients of a successful compliance programmes, such as a good relationship between firm’s business and legal units, and an effective coordination between in-house and outside legal counsel. Overall they show that serious commitment to and investment in compliance can save a firm significant amounts of money and preserve its integrity. They note that Lufthansa estimates it saved €800 million in fines and damages by applying for leniency.

Overall, the volume cautions about overreliance on leniency programmes, while acknowledging the importance of leniency in competition law enforcement. Competition authorities are encouraged to invest proactively in their own investigative efforts. Simultaneously, critically reflection on the performance of leniency programmes to date is needed. The authorities should not shy away from introducing necessary or advisable design changes in other to limits the possible misuse of leniency programmes. In more general terms, there is a need to reframe the broader enforcement discourse from placing such a significant emphasis on the levels of imposed fines and served jail sentences, since these measures are poor proxies of the effectiveness of the agencies’ performance.

Anti-Cartel Enforcement in a Contemporary Age constitutes a very valuable volume. It challenges the too easily accepted assumptions concerning leniency and it explores many of the under-analysed questions relating to leniency’s place in the broader system of enforcement. It warrants a careful read of policy-makers, competition authorities’ officials and practitioners alike.

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Marek Martyniszyn, Anti-Cartel Enforcement in a Contemporary Age. The Leniency Religion, Caron BEATON-WELLS, Christopher TRAN (dir.), September 2015, Concurrences Review N° 3-2015, Art. N° 74840, pp. 243-244

Editor Hart Publishing

Date 5 November 2015

Number of pages 330

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