The Effectiveness of the Dutch Leniency Program

Competition authorities around the world have implanted leniency programs with the aim to detect and destabilise existing cartels and deter the formation of new ones. However, the effects of leniency programs, as predicted by the theoretical literature, are ambiguous. Therefore, scholars have developed theoretical models of cartel behaviour that provide empirical predictions on the effectiveness of such programs. Empirical studies so far mainly focused on the European leniency program and its US counterpart. This study evaluates the Dutch leniency program by applying the theoretical models of Miller (2009) and Harrington Jr. and Chang (2009) to a set of cartels, investigated and convicted by the NMa/ACM between 1998 and 2015. The statistical tests are in accordance with the view that leniency improves cartel detection and helps destabilising cartels. They also provide partial evidence of enhanced cartel deterrence. Results may therefore help to justify the implementation of the Dutch leniency program. Whilst this study is the first one on a national European leniency program, the aim is to offer incentives to further research other leniency programs, implanted by individual European member states. The cross-sectional variation provided by the leniency introduction at individual European member states is important to better infer the causal effect of leniency and the different factors influencing its effectiveness