Oriane Pellegrini

Abstract

This study examines the factors influencing the dissolution of cartels, with a particular focus on the role of leniency programs. Leniency programs, which offer reduced penalties to firms that disclose cartel activity, have been widely adopted by competition authorities to destabilize collusion. However, recent trends indicate a decline in leniency applications, raising concerns about their continued effectiveness. Building on literature from strategic alliances and organizational wrongdoing, this research explores the impact of various proximity factors (geographic, cultural, and organizational) on cartel stability and the likelihood of firms resorting to leniency. Using a logistic regression model, we analyze a dataset of 91 detected cartels to assess whether these factors influence cartel dissolution. Our findings suggest that an increase in cultural distance within a cartel raises the probability of leniency applications, while geographic distance has the opposite effect. Contrary to expectations, variations in organizational structure do not significantly impact leniency decisions. Additionally, we observe that a high frequency of meetings among cartel members correlates with a higher likelihood of leniency, indicating that increased interaction may signal internal coordination difficulties rather than cohesion.