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A Study on Implementing Rules of the Leniency Program

According to the report of OECD, it shows that enforcement of leniency programs by competition law authorities can help to fight hard core cartels, which agreements among competitors to fix prices, restrict output, or divide markets. Since the characteristic of cartel conspiracy meetings might occur in a black room, it is difficult to collect evidence of illegal cartel activities. In order for authorities to detect cartels and also make the ensuing investigations more effective, leniency programs grant reduction in or exemption from sanctions to encourage cartel members which inform evidence about their clandestine meetings and communications.
The U.S. was the first country to introduce a leniency program, while the EU, Germany, South Korea, and Japan have introduced latter. These programs have become more successful in recent years, because the penalties for cartel agreements have increased in some OECD countries. Experience gathered by these authorities to date shows that, the effectiveness of the program would be improved by an increase in the transparency and certainty of the conditions on which any exemption or reduction of fines or surcharges is to be granted.

Presently, our competition law authority ---the Fair Trade Commission(FTC) is considering legislation to enact a leniency program in the draft Amendment to the Fair Trade Law(FTL). Therefore, this paper attempts to discuss the merits and demerits of leniency programs between main competition law countries. The concrete of suggestions that arise out of this paper include the following:(1)The draft Amendment of FTL should impose stronger sanctions against cartels, and the FTC should enact a regulation on the method of setting penalties for cartel conduct.(2)A leniency program work best when the enforcement rules provide a clear standard of immunity or reduction of penalties for a conspirator to come forward.(3)To make an effective leniency program, it is necessary for FTC to adjust the punishment against cartel conduct by a trade association.

Updated at:2010-01-13 15:55:22