Lobbying and cartel enforcement

Abstract

This article examines the effect of firms’ lobbying expenditures on penalties received from public competition authorities. We show that lobbying expenditures are negatively associated with the amount of the cartel sanction, across and within cartel. Our estimates also report that cartel sanctions are more responsive to lobbying expenditures when the lobbying firm qualifies for the leniency programme. If we consider lobbying expenditures as a proxy for informativeness, more uncertainty in uncovering the cartel incentivizes the antitrust authority to reduce the cartel sanction in exchange for lobby.