Cartels, Corporate Compliance and What Practitioners Really Think About Enforcement

Posted by D. Daniel Sokol

Out this week is the newest issue of the Antitrust Law Journal. In it is the article D. Daniel Sokol, Cartels, Corporate Compliance and What Practitioners Really Think About Enforcement. I want to be clear about the article to blog readers. I think that DOJ Antitrust has excellent people working for it and has done wonderful work in uncovering lots of global cartels. The surveys I did in the article, however, suggest some problems with the current structure of the leniency program. I do not think that the leniency program is rotten. However, I do think that some additional tinkering may be necessary.

ABSTRACT: This article shows the limitations to the optimal deterrence-inspired cartel enforcement policy currently used by the Department of Justice Antitrust Division. This article employs both quantitative and qualitative survey evidence of cartel practitioners to shed light upon the realities of US cartel enforcement policy. The empirical evidence provided by the practitioner surveys challenges the traditional assumptions behind the success of the DOJ’s cartel program. Perhaps the most interesting finding is that firms regularly game the leniency program to punish their competitors. For various reasons, firms and the DOJ have strong incentives to settle rather than to litigate cases in which the legality of cartel conduct may be in doubt. The surveys also expose limitations to the optimal deterrence framework for firms and individuals regarding incentives and behavior. These findings suggest the need for an enforcement focus on sub-units within the firm as well as various processes to change behavior that would improve enforcement and deterrence. Finally, the surveys suggest certain structural limitations in organizational behavior within firms that have prevented antitrust compliance programs from becoming embedded in a way that would reduce cartel activity. Additionally, this article provides an analysis of media coverage of cartel enforcement from 1990-2009. The analysis suggests that successful enforcement has not created sufficient awareness of cartel behavior among the public. Relative to other types of financial crimes, such as accounting fraud, the public seems unaware or uninterested in cartel activity. The conclusion summarizes the article’s findings and outlines potential future steps in cartel research.