The Impact Of Introduction Of Leniency Program To Cartel Rate In China

Even though the The Antitrust Law of China which was implemented on august 1st 2008 has introduced Leniency program to the legislation of China, but the Article 46 of The Antitrust Law of China did not offer a specific standard of leniency program and the applicable condition of leniency program is very obscure. In addition, the legislation of leniency program in China also face the problem of absence of individual leniency program and industry associations are not applied to leniency program. As a result, there are lots of difficulties in the practice of it. For example, insufficient penalties, unclear division of jurisdiction, and low shut down rate of cartel organization. This situation largely weakened the deterrence and regulation effect of leniency program to cartel. Research in this paper will figure out if the introduction of leniency program will lower the cartel rate, and provide some research experiences of leniency program in China.Starting from summary of leniency program, Chapter 2 introduces the history of antitrust both in China and worldwide. By analyzing the differences between leniency program and exemption system or compromise system, this chapter also introduces the specific law terms of antitrust in China. In Chapter 3, this paper uses the milk powder case, to which has applied leniency program, to present the current situation of leniency program in China. Moreover, by analyzing the antitrust case of god industry of Shanghai, problems about deficiency in legislation and enforcement of leniency program in China are also discussed in this chapter.Using Cournot Quantity Model, Chapter 4 calculates the payoff of a certain firm under different situation, like choose to collude or compete. Then, this paper uses simplified assumption to deduce the Incentive Compatible Constrain of cartel. Under this condition, this chapter uses non-cartel rate as transition to deduce the expression of cartel rate and discuss the caseload of leniency program and non-leniency program. Finally, this chapter discuss the different situation when enforcement of non-leniency program is exogenous and endogenous separately.In most conditions, the introduction of leniency program will help law enforcement agency to save some enforcement resources, but sometimes it also can be counterproductive. The core issue was presented in Chapter 5 as what kind of impact will the introduction of leniency program cause to cartel rate. This paper found that the introduction leniency program will raise cartel rate when leniency program cases utilized too much enforcement resources so that bunch of non-leniency program cases are ruled out, or the punishment is not severe enough to deter cartel. On the other hand, it will reduce the cartel rate if leniency program cases saved enough enforcement resources or the enforcement system itself are very weak before the introduction.As the conclusion of this paper, by presenting the law cases in European Union and United States, the Chapter 6, based on the conditions under which the introduction of leniency program can impact the cartel rate, put forward few suggestion to improve the leniency program in China.