From ‘Mono’ to ‘Stereo’: Fine-Tuning Leniency and Settlement Policies

The article brings out the ambivalent role played by leniency and settlement policies in today’s cartel enforcement. Both occupy a prime position in the prosecution of cartels, whilst nevertheless having the potential, if not carefully managed, to undermine deterrence. The article first discusses leniency and settlements within the context of economic theories on deterrence and optimal sanctions. The key practical challenges in the operation of leniency and settlement policies are then outlined, providing examples from recent European Commission and United Kingdom practice, as well as from experiences further afield. There is a risk that over-reliance on leniency and settlements compromises fairness, particularly in the context of the often one-dimensional manner in which these tools are deployed. In the second part, the article argues that beyond a purely economics-driven paradigm, the effective administration of leniency and settlement policies requires fairness and due process to be accommodated in equal measure. Due process within penalty-setting has multiple facets, such as respecting the principles of transparency and equality of treatment, to name but a few. The message in the final part is that competition agencies need to consider ways in which to administer remedies more effectively, addressing the goals of deterrence, restoration and behaviour control in a more coherent manner.