The Development of Competition Law
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The Development of Competition Law

Global Perspectives

Edited by Roger Zäch, Andreas Heinemann and Andreas Kellerhals

This innovative book discusses the global character of competition law focusing on three interrelated perspectives; firstly, the impact of economics on competition policy; secondly, the competition law experience in selected countries (USA, EU, Japan, India, China, Brazil, transition countries) and how the law has adapted to the political, economic, geographic and cultural environment; and thirdly, the process of internationalisation and convergence of competition law.
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Chapter 8: Cartel Deterrence and Settlements: The Brazilian Experience

Paulo Furquim de Azevedo and Alexandre Lauri Henriksen


Paulo Furquim de Azevedo* and Alexandre Lauri Henriksen** 1 INTRODUCTION There is not much controversy that settlements are an important part of a policy of cartel deterrence (Hammond, 2006a; Connor, 2007). Some authors emphasise the win–win feature of negotiated procedures to abbreviate the administrative and judicial disputes related to cartel prosecution as opposed to fully adversarial procedures (Landes, 1971; Scott and Stuntz, 1992; Wils, 2008). This almost consensus1 in the literature is absolutely expected, provided that parties are rational and do not have significant cognition problems. In as much as litigation costs may be avoided and the fully adversarial procedure is always an alternative to the settlement, parties must be at least better off if they opt to settle a case. More relevant and with important policy implications is the discussion about the appropriate design of this type of contract, particularly because it is not a trivial solution given the information asymmetry between the competition authority and defendants, and the complex interaction among settlements and other investigative mechanisms, such as leniency agreements. This chapter addresses this issue both theoretically, by means of a simple game theoretical model, and empirically, by means of the Brazilian experience. A quite straightforward model explores the relationship among three alternatives available to cartel participants: pursuing the trial, engaging in a leniency agreement, or settling the case. The model leaves out the * Commissioner at CADE-Brazil and Professor of Economics at Getúlio Vargas Foundation - FGV-EESP. ** From CADE-Brazil. 1 Although the literature is quite convergent...

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