The Booth School of Business, University of Chicago

The Evolution of U.S. Cartel Enforcement

Author(s): Vivek Ghosal and D. Daniel Sokol
Source: The Journal of Law & Economics , Vol. 57, No. S3, The Contributions of Robert
Bork to Antitrust Economics (August 2014), pp. S51-S65
Published by: The University of Chicago Press for The Booth School of Business,
University of Chicago and The University of Chicago Law School
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 The Evolution of U.S. Cartel Enforcement
Vivek Ghosal    Georgia Institute of Technology
D. Daniel Sokol    University of Florida

Abstract
Antitrust as a whole was transformed owing in large part to Robert Bork in The
Antitrust Paradox. This paper examines what Bork said and did not say about
cartel enforcement and offers an examination of how the actual structure of car-
tel enforcement played out relative to what Bork advocated. To provide some
perspective on Bork’s view of cartel enforcement, we compare his views with
those of the other major influential antitrust book of the time by Richard Pos-
ner. We identify three distinct stages of cartel enforcement. Stage 1 is character-
ized by a low number of cartels prosecuted along with low fines and jail terms.
Consistent with Bork’s vision, stage 2 demonstrates a significant increase in car-
tels prosecuted, although fines and jail terms remain low. Stage 3 (the current
stage) exemplifies a decline in the number of cartels prosecuted relative to stage
2 but with dramatic increases in monetary fines and jail terms.

1. Introduction
This paper traces the evolution of the design of the institutional setting of U.S.
cartel enforcement by examining its three major attributes: fines, criminal pen-
alties, and leniency over time. The transformation of cartel enforcement as part
of optimal antitrust institutional design occurred at the same time that much of
antitrust was being transformed. This general transformation was due in large
part to the influential writings of Robert Bork in The Antitrust Paradox (1978).
This paper examines what Bork said and did not say about cartel enforcement
and offers an empirical examination of how the actual structure of cartel enforce-
ment played out relative to what Bork advocated. To provide some perspective
on Bork’s view of cartel enforcement, we compare his views with those of the
other major influential antitrust book of the time, Posner’s Antitrust Law: An
Economic Analysis (1976).
Both Bork (1978) and Posner (1976) advocated a fundamental change in anti-
We thank participants at the 2014 New York University Law School conference Next Generation
of Antitrust Scholarship and the 2013 Yale Law School conference The Influence of Robert H. Bork
on Antitrust Law: A Retrospective and particularly Roger Blair, Dennis Carlton, Harry First, Doug-
las Ginsburg, Margaret Levenstein, George Priest, Eric Rasmussen, Larry White, and anonymous
referees for valuable suggestions.

[  Journal of Law and Economics, vol. 57 (August 2014)]

© 2014 by The University of Chicago. All rights reserved. 0022-2186/2014/5703-0027$10.00

S51

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S52 The Journal of LAW & ECONOMICS

trust policy to one that comported with economic theory and empirics. The focus
of each of the books was to change antitrust doctrine in those areas most in need
of reform—primarily in the area of single-firm conduct. These books, particularly
Bork’s, transformed antitrust in practice (Priest 2014).
For each of these theorists, cartel enforcement was seen as the most import-
ant type of enforcement that the government should undertake (Bork 1978, p.
407; Posner 1976, pp. 507–8). Yet the specifics of how enforcement should work,
given developments in cases and mechanisms for increasing enforcement, were
not well developed in either book. To be sure, enforcement mechanisms were of
secondary concern to reforming antitrust policy to follow an economics-based
approach. However, both Bork and Posner wrote during a period when transfor-
mative changes were occurring in cartel enforcement mechanisms.
We identify three distinct stages of U.S. cartel enforcement in which the nature
of the institutional attributes changed, sometimes along the lines advocated by
Bork and Posner. Stage 1 is characterized by a low number of cartels prosecuted
along with low fines and jail terms as compared with the present. Stage 2 demon-
strates a significant increase in cartels prosecuted, although fines and jail terms
remain low (Bork). Stage 3 (the current stage) shows a decline in the number of
cartels prosecuted relative to stage 2 but with significant increases in monetary
fines (Posner) and jail terms (neither Bork nor Posner).
The paper is organized as follows. In Section 2, we examine Bork’s intellectual
contributions to cartel enforcement along with those of Posner. Bork’s Antitrust
Paradox (1978) is one of the most, if not the most, influential writings in antitrust
scholarship of all time in terms of its policy impact.1 Yet Bork’s brief discussion of
cartels did not focus on the institutional mechanisms of enforcement, even though
all three major attributes of the evolving structure of cartel enforcement were in
play during the 1970s. Next we describe the key cartel-enforcement and institu-
tional changes from 1890 to the present and place Bork’s and Posner’s contribu-
tions in context with these developments. We then examine the data to see how
closely developments in enforcement tracked Bork’s or Posner’s prescriptions.
In Section 3, we describe our historical U.S. cartel-enforcement data, along with
some quantification of the effects of the institutional changes. Section 4 concludes.

2.  Bork and Posner on Hard-Core Cartels

Here we note Bork’s thoughts on cartels, compare his views with Posner’s, note
the key developments in U.S. cartel and antitrust enforcement, and conduct an ex
post assessment of Bork’s views against the fairly significant institutional changes
that altered the path of cartel enforcement.

2.1.  Bork’s and Posner’s Contributions on Cartels

Although Becker’s (1968) optimal-deterrence framework was not applied for-
mally to antitrust until Landes (1983), implicitly the use of this framework per-

1
 Priest (2014) explains why the book had such an important impact.

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 Evolution of Cartel Enforcement S53

vades the work of both Bork and Posner. Although this paper focuses on Bork’s
vision and potential impact, we find it useful to compare and contrast Bork with
Posner, as both were instrumental in altering the path of U.S. antitrust enforce-
ment. In the area of cartels, Bork and Posner had different visions for optimal
cartel enforcement.
Bork’s Antitrust Paradox offers a comprehensive view of antitrust law and pol-
icy. In this broader context of Bork’s argument on the proper role of antitrust, his
discussion on hard-core cartels is surprisingly brief. Bork (1978, p. 263) spends
less than a paragraph in a chapter titled “Horizontal Restraints” on the topic of
hard-core cartels. Instead, the chapter focuses on collusive behavior that has off-
setting efficiencies where the restraints to competition are merely ancillary.2 Fur-
ther, Bork’s solution to combat cartels is equally brief—to open more field offices
to prosecute local cartels (p. 406). This brief treatment of hard-core cartels per-
haps reflected a sense that hard-core cartels were both conceptually and doctrin-
ally easy situations. Consequently, the analytical structure of cartel enforcement
was not in need of repair relative to other parts of the antitrust system.
As a result of the brief treatment of naked cartels, Bork (1978) is silent with
regard to a number of critical features about how changes being institutionalized
in the area of cartel enforcement (leniency, increased fines, and increased incar-
ceration), which by the time of the publication of The Antitrust Paradox would
have a profound impact on enforcement. He is equally silent about international
cartel issues.
To be highly critical of Bork for the lack of specificity is excessive. The specific
mechanics of how cartel enforcement might work was a second-order question
for Bork relative to the repair of antitrust policy overall. To the extent that one
can be critical about Bork regarding cartels, it is that he fails to include in his
writing an institutional approach to cartel enforcement, particularly at a time in
which the institutional structure was shifting, which would subsequently have a
profound effect on cartel enforcement.
Posner was the other leading agent of change in antitrust law during the 1970s
and offered an alternative vision to that of Bork as to cartel enforcement. In his
book, Posner argues against criminal incarceration and instead advocates the use
of increased fines in both the first edition (1976) and second edition (2001) of An-
titrust Law. Advocacy for increased fines suggests a belief that cartel enforcement
was suboptimal in both periods because the punishment was too small, even after
a significant increase in the number of cartels detected during the 1980s and an
increase in the detection of international cartels during the 1990s.
On the three issues that Posner specifically raises—the doctrinal shift to a
broader view of tacit collusion, increased fines (Posner was in favor of increases
in fines—even after the 1974 Antitrust Procedures and Penalties Act), and the use
of incarceration (Posner opposed it)—Bork is silent on the last two. We interpret

2
 Bork had concerns about misapplication of per se rules to cases such as United States v. Topco
Associates, Inc., 405 U.S. 596 (1972), and United States v. Sealy, Inc., 388 U.S. 350 (1967).

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S54 The Journal of LAW & ECONOMICS

Bork’s silence on Posner’s ideas to mean that Bork found cartel enforcement sub-
optimal but for different reasons. If cartel enforcement was optimal or close to it,
there would have been no need to advocate more Department of Justice (DOJ)
field offices. By implication, Bork’s conceptualization of suboptimal enforcement
regarding cartels focused on the likelihood of detection rather than on the design
of penalties (incarceration and fines). Thus, Bork’s silence on increased penalties
suggests that he believed that the then-mix of low criminal penalties for individ-
uals and low fines was sufficient in terms of penalties but that the problem with
cartel enforcement was with detection.3
The present structure of cartel enforcement with high fines, significant incar-
ceration, an emphasis on large international cartels, and the use of leniency is
very different from what concerned Bork. In fairness to Bork, the goal of The
Anti­trust Paradox was broader. Bork wanted to provide theoretical coherence to
what was rather poorly conceptualized antitrust case law.4 Operationalizing his
vision was of secondary concern. However, Bork’s silence on fines and incarcera-
tion in the face of the publication of Posner’s book just 2 years before the publica-
tion of The Antitrust Paradox is somewhat surprising.5 Moreover, increased fines
had just been introduced in 1974. On the incarceration side, at the end of 1976,
Donald Baker, the then-head of the Antitrust Division, gave a speech in which he
advocated for a significant increase in the use and severity of criminal antitrust
(Baker 1976). In 1977, guidelines were promulgated shortly thereafter that advo-
cated higher levels of criminalization (U.S. Department of Justice 1977).
In the area in which Bork was explicit, the emphasis on local cartel enforce-
ment was in some ways brilliant. He was able to focus on the low-hanging fruit
of cartel enforcement—significant cartel activity at the local level. In the context
of the time in which he wrote, the world was also less open to trade than at the
present, and international cartel activity may have been less significant than after
the Uruguay round of trade negotiations (Levenstein and Suslow 2014). Bork was
also silent on leniency. Given that international enforcement and leniency were
not significant in the late 1970s, it is difficult to fault Bork for not focusing on (or
perhaps anticipating) these changes.
Bork and Posner, when taken together, showed tremendous insight in identi-
fying most of the critical institutional questions with regard to cartels.6 Our em-

3
 Bork’s policy prescription of increased cartel enforcement via additional Department of Justice
(DOJ) field offices suggests that Bork may have been less convinced than Stigler (1964) of the inher-
ent instability of cartels. That is, if cartels naturally fail, the case for increased cartel enforcement via
more staffing of regional field offices would be weak. Subsequent research into cartels suggests that
cartels are more successful than Stigler may have anticipated (Levenstein and Suslow 2004, 2011,
2014).
4
 Whether Bork actually meant total welfare rather than consumer welfare is a different question.
See Blair and Sokol (2012) for a discussion.
5
 Priest (2014) explains why it took so long for Bork to publish The Antitrust Paradox.
6
 Neither Posner nor Bork discuss the leniency program or its implication in their initial or re-
vised editions. In Posner’s case, the lack of discussion in the initial edition is understandable—the
leniency program was first discussed in 1976. However, the lack of discussion in the second edition is
surprising since it was published well after new leniency policies had yielded impressive results. The

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 Evolution of Cartel Enforcement S55

pirical results (Section 3) suggest that depending on the period in question, U.S.
cartel-enforcement policy has followed in part the policy prescriptions of Bork or
Posner since the late 1970s.

2.2.  Key Developments in Domestic U.S. Cartel Enforcement

The 1960s and 1970s saw important shifts in institutional structures of car-
tel enforcement. The first iteration of the leniency program was also introduced
during this period.7 These three innovations (higher financial penalties, greater
criminal sanctions, and leniency) were all efforts to increase the punishments as-
sociated with cartel behavior and a higher probability of detection. Cartel fines,
which had been increased in the 1950s, were low by today’s standards, even when
adjusted for inflation. Cartel activity also was a misdemeanor rather than a fel-
ony. All of these changes (or, in the case of leniency, at least discussion of the pro-
posed change) occurred before the publication of The Antitrust Paradox.8
To motivate the empirical analysis in Section 3, we provide an overview of the
critical events in the timeline of cartel policy. These events provide a context for
what was known at the time of the publication of The Antitrust Paradox and for
subsequent events.
Table 1 presents the timeline of key U.S. cartel-enforcement events. In 1890,
the Congress passed the Sherman Act. The statute set the maximum fine at
$5,000. In 1955, Congress raised the maximum fine under the Sherman Act to
$50,000 per count. Shortly thereafter, an enforcement shift occurred regarding
incarceration. United States v. McDonough Co. (180 F. Supp. 511 [1959]) led to
the conviction of four executives.
The next major set of cartel cases occurred in the period 1958–61 as a result of
the electrical equipment price-fixing cases. These cases involved 30 corporations
and 45 defendants. The cartel received significant public scrutiny because of the
size of the overcharges, the prominence of the companies involved, the small fi-
nancial penalties, and the jail time for “respectable” people (Bane 1973; Sultan
1974).9 As Connor notes (2001, p. 43), “Corporate antitrust convictions were the
equivalent of corporate parking tickets.” Similarly, Denger (2003) notes eight ex-

other area of cartel dynamics in which neither acknowledged a fundamental enforcement issue was
in international cartel enforcement.
7
 Although the original leniency program was introduced in 1978, DOJ Antitrust Division officials
had been discussing the leniency program since 1976, according to senior Antitrust Division offi-
cials at the time, with whom we conferred.
8
 Whether the innovations brought antitrust closer to optimal deterrence is a separate question.
We cannot observe actual cartel behavior, and so we cannot be sure of the number of unidentified
cartels at any point in time or over time. However, scholarship estimates the detection rate in the
United States of between 13 and 17 percent from 1961 to 1988 (Bryant and Eckard 1991). More re-
cent scholarship (Detre, Golub, and Connor 2005) shows no change in detection rates. This perhaps
suggests that enforcement remains suboptimal. On theoretical grounds, cartel stability may have
increased postleniency by those cartels that have been able to harden as a result of being undetected
(Harrington 2004). On the empirics of cartels, see Levenstein and Suslow (2014).
9
 The popular press covered the conspiracy closely (Herling 1962).

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S56 The Journal of LAW & ECONOMICS

Table 1
Selected Developments in U.S. Enforcement Developments of Cartels

Year Development Citation

1890 Sherman Antitrust Act 15 U.S.C. secs. 1–7
1908 United States v. American Tobacco Co. 164 F. 700 (1908)
1930s Thurman Arnold prioritizes international cartel
enforcement
1945 United States v. Aluminum Company of America 148 F.2d 416 (1945)
1955 Maximum cartel fine increased
1959 United States v. McDonough Co. 180 F. Supp. 511 (1959)
1957–61 Electrical equipment cartel cases
1974 Antitrust Procedures and Penalties Act 15 U.S.C. sec. 16
1977–78 United States v. Continental Group et al. 456 F. Supp. 704
1977–79 U.S. uranium cartel litigation and international
responses
1978 Original U.S. leniency program
1979 Hart-Scott-Rodino Act of 1976, first full year of
implementation Pub. L. No. 94-435, 90 Stat. 1383
1981 Reagan inaugurated, subsequent changes in
enforcement
1982 Foreign Trade Antitrust Improvements Act Pub. L. No. 97-290, 96 Stat. 1246
1984 Criminal Fine Enforcement Act Pub. L. No. 98-596, 98 Stat. 3134
1987 U.S. Sentencing Guidelines (1984) applied to all
offenses
1990 Antitrust Amendments Act Pub. L. No. 101-588, 104 Stat. 2879
1993 Revised leniency program
1996 Lysine cartel
1996 First use of the alternative fine statute (based on gain
or loss) 18 U.S.C sec. 3571(d)
2004 Congress passes Antitrust Criminal Penalty
Enhancement and Reform Act Pub. L. No. 108-237, 118 Stat. 661
2006 Congress amends wiretapping statute to include
antitrust violations
2012 Department of Justice closes Atlanta, Philadelphia,
and Cleveland field offices

amples of domestic cases in the 1970s in which the settlement was 2–4 percent of
sales.
It was precisely because of low penalties—financial and jail time—that changes
were introduced during the 1970s to increase the severity of punishment via
higher jail time and increased fines. Moreover, it was because of perceived low
levels of detection that the DOJ created the leniency program.
In 1974, Congress enacted the Antitrust Procedures and Penalties Act (15
U.S.C. sec. 16). Cartel crimes were changed from misdemeanors to felonies, the
maximum fine for a cartel violation was increased to $1 million, and the maxi-
mum term of imprisonment for collusion was increased to 1 year. A few years
later, the United States v. Continental Group cases were decided (United States v.
Continental Group, Inc., 456 F. Supp. 704 [E.D. Pa. 1978]; United States v. Conti-
nental Group, Inc., 603 F. 2d 444 [1979]). These were the first sets of felony con-
victions at trial. During 1978, the enforcement structure changed, as the original

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 Evolution of Cartel Enforcement S57

U.S. leniency program was introduced. This leniency program proved to be inef-
fective.10
A significant change occurred with the election of Ronald Reagan. The govern-
ment’s civil enforcement of sections 1 and 2 of the Sherman Act significantly di-
minished (Baker 2002; Ghosal 2001, 2006, 2008, 2011b; Ghosal and Gallo 2001).
The creation of the Merger Guidelines in 1982, which were revised in 1984, also
changed patterns of antitrust enforcement (Ghosal 2011a). This shift in Antitrust
Division resources impacted cartel enforcement.11 Criminal enforcement in-
creased under Reagan in terms of the number of cases and marginally in terms of
penalties imposed (see Figures 1–4).12
In 1984, Congress passed the Criminal Fine Enforcement Act (Pub. L. No. 98-
596, 98 Stat. 3134), which increased individual fines to $250,000. Further pen-
alty enhancement came in 1987 when the U.S. Sentencing Guidelines (passed
in 1984) were applied to all cartel offenses.13 Further changes came about when
Congress passed the Antitrust Amendments Act of 1990 (Pub. L. No. 101-588,
104 Stat. 2879). The act increased maximum fines to $10 million for corporations
and $350,000 for individuals. Prison terms increased to up to 3 years. The 1990
act was a significant ratcheting up of sanctions compared to the previous penalty
structure.
The next significant transformative event in cartel enforcement occurred in
1993 when the DOJ revamped the leniency program. Under the revised leniency
program, the DOJ provided a leniency applicant automatic amnesty if there was
no preexisting cartel investigation and there was full cooperation. Further, am-
nesty was available even when cooperation began after an investigation. Finally,
in situations in which a corporation qualified for automatic amnesty, all direc-
tors, officers, and employees who cooperated fully also received automatic am-
nesty.
The first use of revised leniency occurred in 1995 for the lysine cartel. The
companies settled with the DOJ in 1996 for criminal fines of $105 million, a
then-record amount.14 The cartel members also incurred a total of $305 million
in private damages (Connor 2001). The majority of lysine cartel members were
international. Before 1995, fewer than 1 percent of all DOJ cartel indictments in-

10
 Only one leniency application was received per year, and not a single leniency application was
for an international cartel (Hammond 2004). Another important issue is that the DOJ’s resource
allocation changed shortly after the introduction of the leniency program. In 1979, the Hart-Scott-
Rodino Antitrust Improvements Act of 1976 (Pub. L. No. 94-435, 90 Stat. 1383) went through its
first full year of implementation. The first year of merger-filing notifications totaled over 800 filings.
Increasingly, merger control became far more resource intensive, potentially distracting from other
areas of enforcement.
11
 In 1982, Congress passed the Foreign Trade Antitrust Improvements Act (Pub. L. No. 97-290,
96 Stat. 1246) to clarify the extraterritorial application of the Sherman Act.
12
 Much of the cartel enforcement in the 1980s and early 1990s appeared to focus on procurement
and infrastructure collusion (Kovacic 2011).
13
 Until the implementation of the Sentencing Guidelines, judges were reluctant to impose signifi-
cant sentences on white-collar offenders.
14
 The year 1996 also marked the first use of the alternative fine statute (18 U.S.C. 3571[d]).

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S58 The Journal of LAW & ECONOMICS

volved non-U.S. conspirators. Other significant international cartel cases quickly

followed.15
Further changes occurred during the George W. Bush presidency. In 2004,
Congress passed the Antitrust Criminal Penalty Enhancement and Reform Act
(ACPERA) (Pub. L. No. 108-237, 118 Stat. 661). This increased the maximum
cartel fine to $100 million, provided for prison terms of up to 10 years and $1
million in individual fines, and awarded single damages for the leniency appli-
cant who cooperated with plaintiffs. Once again, relative to the previous penalty
structure (the 1990 amendment), ACPERA significantly increased the penalties
associated with collusion. In 2006, Congress amended the wiretapping statute to
include antitrust violations. More recently, in 2012 the DOJ closed its Atlanta,
Philadelphia, and Cleveland field offices, which historically participated and
aided in cartel enforcement.

3.  Cartel-Enforcement Patterns

Our primary data are from the U.S. DOJ’s historical enforcement statistics. The
longest time series available is for total cartel cases, 1948–2012. The other data re-
lated to number of individuals and corporations prosecuted, fines, and incarcera-
tions, among others, were available only for the period 1969–2012. All monetary
data (fines) are measured in real 2005 dollars. The enforcement data are displayed
in Figures 1–6.
Figure 1 shows that prior to 1979–80, the mean number of cartel cases was
about 20 per year. It rises sharply starting in 1981 to about 60 cases per year.
Thereafter, it falls steadily, reaching a low of 25–30 cases per year, before showing
an uptick after 2009. While the pre-1980 period typically contains a uniformly
low number of prosecutions, the post-1980 period reveals a mixed picture, with
highs reaching almost 100 cases and lows of about 25. The active enforcement
during this period in terms of the number of cases suggests that Bork’s approach
to increasing the probability of detection likely became the cornerstone of cartel
enforcement. As Bork’s second edition of The Antitrust Paradox still advocated
for additional DOJ field offices and was silent as to penalties, we assume this to
mean that Bork continued to view cartel enforcement as a problem of inadequate
detection and prosecutions rather than of severity of punishment.
An interesting observation is that in the aftermath of 1993 leniency program
restructuring, the actual number of cartels prosecuted declines somewhat. Figure
2 displays the ratio of total cartel cases to total civil cases. It reveals a ratio of less
than 1.0 in the pre-1980 period and a mean ratio of about 6 during the 1980–1993
period and thereafter fluctuates around a mean of about 2.5.
A different pattern emerges in Figures 3 and 4, which show the total fines and

15
 As International Competition Policy Advisory Committee (2000, ch. 4) notes, the change in in-
ternational priorities and the effect of the new leniency program were significant within a short time.
“From 1987 through 1990, the Antitrust Division did not file a single criminal cartel case against a
foreign-based corporation or individual. . . . By 1997, the figures had surged so that 32 percent of
corporate defendants and the same number of individual defendants were foreign-based.”

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 Evolution of Cartel Enforcement S59

Figure 1.  Total cartel cases

Figure 2.  Ratio of total cartel cases to total civil cases

total days in jail. Figure 3 indicates that the fines did not increase until after 1996
(the lysine fines in 1996 set new records). Figure 4 shows that the total number
of incarceration days increases gradually from the mid-1990s and shows a clear
jump starting in the mid-2000s. The clear message is that the severity of penalties
has increased dramatically only in the more recent years.
Figures 5 and 6 tell much the same story as Figures 3 and 4, but the contrast is
even sharper. In Figure 5, the number of individuals and corporations fined de-
clines steadily from their peaks in the mid-1970s. Figure 5 reveals that while the
number of cartel cases generally increased, the number of individuals and corpo-
rations prosecuted declined steadily from its peak in the late 1970s. The increase
in total fines (Figure 3) and the decreased number of corporations prosecuted
(Figure 5) reveals itself in much higher fines per corporation starting around the
mid-1990s (Figure 6). The mid-1990s also correspond to the period when the le-
niency program was restructured. The figures suggest that the introduction of the

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S60 The Journal of LAW & ECONOMICS

Figure 3.  Total fines, corporate plus individual (real 2005 $1,000s)

Figure 4.  Total incarceration days ordered by court

revised leniency program, along with the Antitrust Amendments Act (1990) and
ACPERA (2004), impacted cartel enforcement. Overall, the story that emerges
for U.S. cartel enforcement is that the main changes in enforcement appear to be
less in the number of cartels prosecuted and more in the increasing harshness of
penalties in terms of incarceration time and fines.
Next we examine whether the institutional changes related to leniency and the
new penalty programs had measurable effects on the cartel-enforcement vari-
ables, in particular the number of cases prosecuted, fines, and jail terms. Our
objective is not to conduct a thorough econometric investigation but merely to
present some quantification.
In our regressions we alternatively include two sets of variables: a dummy
variable for the new leniency (1993) regime that takes a value of one for 1993–
2012 and zero otherwise or two dummy variables for institutional changes that
affected the severity of punishments (fines and jail terms): Punish1 (Antitrust

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 Evolution of Cartel Enforcement S61

Figure 5.  Number of individuals and corporations fined

Figure 6.  Fine per corporation (real 2005 $1,000s). A similar intertemporal pattern
holds for fines per individual.

Amendments Act of 1990) takes a value of one for the years 1990–2003 and zero
otherwise, and Punish2 (ACPERA) takes a value of one for the years 2004–2012
and zero otherwise. We do not use both the new leniency and Punish1 and Pun-
ish2 dummy variables in the same specification because of multiple overlapping
years.16
The estimates in Table 2 include the new leniency program (1993) dummy.
There appears to be no statistically significant effect on the total number of cartels
prosecuted. But there are strong positive effects on penalties: fines per individual,
fines per corporation, total fines per case, jail days per individual, and total jail
days per case. On the basis of the estimates in Table 2, the effects of the new leni-

16
 Including multiple sets of dummy variables creates significant collinearity problems because of
overlapping periods and complicates drawing meaningful inferences.

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S62 The Journal of LAW & ECONOMICS

Table 2
Leniency Effects

Total Fine per Fine per Total Fines Jail Days Total Jail
Cartel Individual Corporation per Case per Days per
Cases ($) ($) ($) Individual Case
Intercept 13.94+ 46.92+ 108.83+ 194.47 79.06+ 30.09+
(.01) (.01) (.03) (.19) (.01) (.01)
LDVt−1 .77+ −.03 .68+ .56+ .42+ .41+
(.01) (.80) (.01) (.01) (.01) (.01)
New leniency −5.15 107.97+ 8,153.41+ 5,238.62+ 217.02+ 169.85+
(.19) (.01) (.02) (.03) (.01) (.02)
R2 .66 .17 .68 .56 .60 .38
DW 2.00 2.04 2.25 1.98 2.45 2.41
ρ −.01 −.03 −.14 −.06 −.26 −.24
Note. LDVt−1 is the lagged dependent variable. Only one lag is reported, as the second lag was not
significant. New leniency refers to the revised leniency program starting in 1993–2012. The p-values
computed from two-tailed heteroskedasticity-consistent standard errors are in parentheses. A
p-value < .01 is reported as .01; DW and ρ denote the Durbin-Watson statistic and the first-order
autocorrelation, respectively.
+ p < .10.

ency period appear to manifest themselves primarily in the severity of the penal-
ties and not in the number of prosecutions. Next we present results for the two
punishment dummy variables: Punish1 (1990 act), and Punish2 (ACPERA). The
estimates in Table 3 reveal that the clearest effects of Punish1 and Punish2 man-
ifest themselves in the severity of the penalties and not in the number of cartels
prosecuted.17

4.  Discussion and Concluding Remarks

In various stages, the Antitrust Amendments Act (1990), the revised leniency
program (1993), and ACPERA (2004) affected the financial penalties, increased
jail time, and developed sophisticated mechanisms to disrupt incentives to form
and sustain collusive agreements. These policy innovations transformed U.S. car-
tel enforcement to its current state.
On the basis of historical enforcement data, we are able to identify three broad
periods of U.S. cartel enforcement. The first period, roughly pre-1980, saw a rela-
tively limited number of cartels prosecuted, along with minimal penalties as mea-
sured by fines and jail time. The second period, roughly between 1980 and 1995,
saw a dramatically higher number of cartels prosecuted but only marginal in-
17
 Our estimated clear effects of the Antitrust Criminal Penalty Enhancement and Reform Act
(ACPERA) contrast with findings by Miller (2009) and Sokol (2012). Most likely, there was a lag
from the passage of ACPERA to the time that results from ACPERA became clear that was not cap-
tured by the earlier studies. Miller’s data consist of all indictments and information reports filed for
violations of section 1 of the Sherman Act between January 1, 1985, and March 15, 2005. While this
time period is sufficient to explore the revised 1993 leniency program’s effects, the endpoint for the
data of March 2005 is clearly not enough time to examine the 2004 ACPERA effects. Sokol’s data
consist of both qualitative and quantitative survey data of cartel practitioners. The passage of more
time and a broader set of responses may explain divergence from that study.

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 Evolution of Cartel Enforcement S63

Table 3
Punishment Effects

Total Fine per Fine per Total Fines Jail Days Total Jail
Cartel Individual Corporation per Case per Days per
Cases ($) ($) ($) Individual Case
Intercept 12.47+ 42.26+ 148.03+ 350.20+ 116.18+ 53.81+
(.01) (.01) (.01) (.04) (.01) (.01)
LDVt−1 .81+ −.01 .45+ .31 −.01 −.06
(.01) (.92) (.01) (.12) (.95) (.78)
Punish1 −6.11 86.06+ 4,577.05+ 2,719.42+ 216.95+ 71.61+
(.27) (.02) (.08) (.07) (.01) (.05)
Punish2 −2.48 118.24+ 21,266.00+ 12,623.00+ 551.96+ 531.92+
(.56) (.02) (.01) (.01) (.01) (.01)
R2 .65 .12 .75 .65 .69 .56
DW 2.03 2.03 2.27 2.09 2.36 2.23
ρ −.02 −.03 −.14 −.07 −.19 −.12
Note. LDVt−1 is the lagged dependent variable. Only one lag is reported, as the second lag was not
significant. Punish1 refers to the Antitrust Amendments Act of 1990 and covers the period 1990–
2003, and Punish2 refers to the Antitrust Criminal Penalty Enhancement and Reform Act of 2004 and
covers the period 2004–2012. The p-values computed from two-tailed heteroskedasticity-consistent
standard errors are in parentheses. A p-value < .01 is reported as .01; DW and ρ denote the Durbin-
Watson statistic and the first-order autocorrelation, respectively.
+ p < .10.

creases in penalties. The third period, roughly starting in 1995 and continuing, is
characterized by a somewhat lower number of cartels prosecuted (relative to the
second period) but dramatically higher fines and jail terms.
The current stage, with dramatically higher penalties but a lower number of
prosecutions, is suggestive of a clear shift in objectives. The new enforcement net,
so to speak, is designed to catch bigger fish. This objective could be justified on
the grounds of proportionality to the degree of economic harm, as well as admin-
istrative efficiency. Such policy shifts, however, have pros and cons. While this
net is more likely to catch larger firms and multinational conspiracies, domestic
local and regional price-fixing conspiracies may suffer from a lack of detection
and deterrence. We attribute the recent closings of several DOJ regional offices to
this shift in emphasis.18
Some of these trends can be situated within the Chicago school antitrust ap-
proach, as Bork, among others, played an instrumental role in the adoption of
Chicago-based ideas by courts and agencies (Hovenkamp 2003). In the area of
cartel enforcement, Bork appears to have most directly impacted what we iden-
tify as the second stage of cartel enforcement (roughly 1980–95), primarily in
terms of the number of cartels prosecuted.
In other institutional developments of cartel enforcement, particularly the
current stage, Bork’s thinking played a much smaller role. Bork was silent as to
whether alternative enforcement penalties (incarceration and increased fines)

18
 Interestingly enough, this is the exact opposite of what Bork (1978, p. 406) recommended in The
Antitrust Paradox.

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S64 The Journal of LAW & ECONOMICS

other than opening field offices would be desirable. It is difficult to fault Bork spe-
cifically for the lack of focus on international enforcement. The global antitrust
community has been far more permissive to (and indeed facilitated) cartels in
their own jurisdictions.

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