Working Paper: CEPR ID: DP14369
Authors: Winand Emons; Severin Lenhard
Abstract: To encourage private actions for damages in antitrust cases some jurisdictions subtract a fraction of the redress from the fine. We analyze the effectiveness of this policy. Such a rebate does not encourage settlement negotiations that would otherwise not occur. If, however, the parties settle without the rebate, the introduction of the reduction increases the settlement amount, yet at the price of reduced deterrence for those wrongdoers who are actually fined. Under a leniency program the rebate has no effect on the leniency applicant: she doesn't pay a fine that can be reduced. The overall effect of a fine reduction on deterrence is, therefore, negative.
Keywords: antitrust; damages; deterrence; leniency
JEL Codes: D43; K21; K42; L40
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| fine rebates (L42) | settlement amounts (K41) |
| fine rebates (L42) | deterrence (K42) |
| settlement amounts (K41) | deterrence (K42) |
| fine rebates (L42) | leniency applicants (K40) |