Leniency Inflation, Cartel Damages, and Criminalization

We revisit the pros and cons of cartel criminalization with focus on its possible introduction in the EU. We document a recent phenomenon that we name EU ``leniency inflation", whereby leniency has been increasingly awarded to many, and sometimes all members of a cartel. We argue that, coupled with the non-disclosure of leniency statements and the insufficient protection of leniency applicants from damage claims introduced by the 2014 Damages Directive, it may have led to a decrease in cartel convictions. Together with evidence on the current level of fines, this points at the need to introduce criminalization. We then explore data on US criminal enforcement (1990-2015) to highlight potential areas of concern for policymakers, if criminal sanctions will be implemented in the EU. Among other things, we find that individuals in cartels where multiple offending firms are involved, are less likely to obtain a prison sentence.