Heterogeneous Effects of Private Antitrust Enforcement on Collusive Behaviour

Abstract The prevailing view in the field of antitrust today suggests that societies promoting private enforcement inevitably discourage leniency applications. Recent studies propose that instead of treating private enforcement as a monolithic entity, we should consider the distinct effects of three categories of private actions: (1) follow-on private actions resulting from leniency applications, (2) follow-on private actions NOT resulting from leniency applications, and (3) standalone actions. These recent studies articulate that the first type of private action discourages leniency applications, while the latter two types encourage whistle-blowing. Consequently, policymakers could adopt a targeted approach by only incentivizing certain forms of private antitrust actions to promote leniency applications. To examine if the above assertion is true, this article conducted a randomized controlled experiment using a leniency game that, for the first time, incorporated all three forms of private antitrust actions to assess the heterogeneous effect of private enforcement and leniency applications, as well as other collusive behaviour. Our experiment does indicate that the impact of different types of private enforcement on market participants’ behaviour varies.