The Impact of Dual-Agency Leniency Policy on Cartel Detection

Abstract We study cartel detection when two public authorities operate separate leniency programs within the same jurisdiction, as in Korea. We develop an infinitely repeated triopoly model to compare single-agency enforcement with dual-agency enforcement, to distinguish independent operation from cooperation, and to examine how the structure of immunity and fine reductions affects incentives to apply for leniency. When programs operate independently and do not recognize each other’s leniency marker, firms can have weaker incentives to self-report and applications can concentrate in a single program. Cooperation that recognizes leniency priority across authorities restores the race to the courthouse and enlarges the set of enforcement environments in which self-reporting occurs. Cooperation is most reliable when first-in applicants receive comparable treatment across authorities: when reductions for subsequent applicants are available only in the administrative program, greater criminal sanctions can reduce the effectiveness of cooperation by increasing residual liability for subsequent applicants. The results identify limited coordination and harmonization of leniency benefits as key margins for effective dual-agency leniency.