Leniency and Damage Liability for Cartel Members in Brazil.

A recent debate on leniency policies is the interplay between the public and the private competition law enforcement. The lack of a well-established set of rules regarding damage claims may be harming the effectiveness of the Brazilian Leniency Program, either by discouraging the wrongdoers from applying for leniency in already formed cartels or by not being threatening enough to deter the cartel formation. The paper objective is to analyze the best policies for leniency applicants regarding the damage liability in Brazil. We conclude that the optimal policy is providing immunity to the leniency applicant, and after that the damage claim lawsuits can be encouraged with no undesirable effects. Extensions confirm the following: the immunity is even more effective when there is risk of betrayal; the immunity is the best policy in the case of ex-post leniency; the immunity is the optimal policy when there is no bankruptcy, otherwise the applicant liability should be the minimum necessary to avoid the bankruptcy; immunity regarding criminal sanctions for individuals is the optimal policy; for international cartels, the optimal policy is a combination of immunity regarding damage claims in all jurisdictions. JEL codes : L13; L41; L44 [ABSTRACT FROM AUTHOR]