Frederik Silbye
The European Commission has in recent years initiated an effort to facilitate private actions for damages in cartel cases. This paper demonstrates in a stylized game-theoretic framework that an increase in antitrust damages can be pro-collusive when a leniency program is already in place. The result holds true even if antitrust authorities are allowed to re-shape their leniency program in reaction to the higher damage level. Larger damage payments imply lower incentives to self-report if damages are not fully encompassed by the leniency program; in effect, the program has to be more generous to enforce self-reporting. But if antitrust authorities are not allowed to offer cash rewards to whistle-blowers, the sufficient level of generosity might be unattainable.