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Leniency, Whistle-Blowing and the Individual: Should We Create Another Race to the Competition Agency?

Maurice E. Stucke, Published in Anti-Cartel Enforcement in a Contemporary Age: Leniency Religion, Hart Publishing, 2015

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Leniency policies are premised on a race to the competition agency. Competition authorities generally discuss one race, but several races can lead to their door. The first race is among the cartel’s firms. The second race, which competition authorities discuss less frequently, is between the guilty individuals and the companies that employ them. And the third race, which the competition authorities rarely discuss, is between whistle-blowers and the price-fixers. In Part II, this chapter outlines corporate and individual leniency policies and why they have not optimally deterred cartels. In Part III, the chapter discusses a key issue for competition authorities: why and under what circumstances do people report misconduct, in particular conduct they know is illegal? Relatedly, can competition agencies advance the third race to their doors by paying whistle-blowers for information about cartels? Part IIIA first describes existing whistle-blower policies. Part IIIB next examines the benefits and concerns associated with offering bounties to whistle-blowers. Part IIIC explores whether whistle-blowers are primarily driven by financial incentives. The empirical whistle-blowing literature and behavioural economics studies cast doubt on the assumption that they do. One risk in offering a financial reward, as Part IIID discusses, is that market norms can crowd out the social, ethical and moral norms for whistle-blowing (and thereby reduce the quality of whistle-blowing tips). In promoting a financial incentive, the competition agency encourages individuals to focus on whistle-blowing’s financial costs and benefits; as a result, the bounty would likely have to far exceed the bounties a few competition authorities currently offer. In Part IIIE, the chapter examines other factors found to motivate whistle-blowing, and their implications for competition agencies interested in promoting whistle-blowing. Part IV concludes.

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