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Leniency is back, but can it keep pace with a shifting enforcement reality?
Leniency is back, but can it keep pace with a shifting enforcement reality?
2 July 2025
Series
Blogs
2 July 2025
After several years of substantial decline, leniency applications are rising again, alongside revamped enforcement activity and reforms. While this is due in part to competition authorities making renewed efforts to increase the attractiveness of leniency, the ramp up in enforcement takes place alongside authorities diversifying detection tools to tackle enforcement challenges. This post explores these trends, emerging detection strategies and the renewed focus on encouraging self-reporting.
Between 2015 and 2021, leniency applications fell dramatically, falling by 65% across all jurisdictions globally, and by 58% within OECD countries. The European Commission (EC) in particular saw a significant 60% decline in leniency applications and a corresponding downward trend in EC cartel cases, with only six cartel investigations initiated between 2020 and 2024. But what was the cause of this decline.
One common theory links the decline to the rise in damages actions as chilling incentives to apply for leniency/immunity from administrative fines, particularly as the potential exposure under litigation (as well as the drain on resources) can often dwarf the avoided sanction. Many point to the EU Damages Directive (2014), and similar policies, as discouraging leniency applicants. First applicants, who normally benefit from immunity from fines, have found themselves exposed to follow-on damages claims.
This has led to calls for reforms to shield first-in leniency recipients from civil liability, an approach that some jurisdictions have embraced with mixed success. In the EU, leniency applicants now face more limited liability, bearing responsibility for harm caused to their direct and indirect purchasers, or where other cartel members cannot fully compensate victims. Other jurisdictions (such as the US, Brazil and Colombia) have introduced their own limitations, although evidence linking private enforcement to declining leniency applications remains mixed.
Another explanation for the sharp decline in leniency applications is that the programmes may have outgrown their success, a co-called “leniency inflation”. OECD data suggests a lifecycle pattern in which leniency programmes peak 12–14 years after a programme’s introduction, followed by a natural decline. The absence of any centralised “one-stop-shop” for leniency applications adds to the challenge.
As authorities have devoted more resources to leniency, other detection methods may have been neglected. When cartelists sensed that detection outside of leniency was less of a threat, the urgency to self-report may have faded – The reduced risk of getting caught without leniency may have emboldened them to take a gamble.
Against this backdrop, there is a recognition that leniency alone cannot be expected to bear the full weight of cartel detection and deterrence. Ultimately, leniency can only be effective when backed by credible, multi-faceted enforcement. Regulators worldwide are investing in new detection methods, recognising that relying solely on self-reporting is no longer sufficient.
Proactive strategies, such as cartel screening, market monitoring and the use of specialised analytics, are now standard tools in many authorities’ arsenals. The UK’s CMA, for example, has adopted data analytics (including AI) tools for suspicious activity detection, with Juliette Enser flagging in May the CMA’s plans to focus on detecting and deterring anticompetitive practices in procurement. The EC is trialling more flexible inspection methods, while Brazil’s Administrative Council for Economic Defense (CADE) uses AI to uncover bid-rigging schemes, and the US DOJ’s Procurement Collusion Strike Force leverages machine learning to flag suspicious patterns in public contracts.
As set out above, it may well be the case that innovative action by authorities could also raise the perceived risk of detection, thereby increasing the potential value of leniency.
In addition, over the past 18 months, a wave of reforms has aimed to restore confidence and recalibrate incentives. The EC set the pace by clarifying its leniency policy at the end of 2022. Since February 2024, India, the US, Canada and Australia have also introduced reforms. And the UK’s CMA is the latest regulator to propose updates to its leniency guidance. These renewed efforts have coincided with a three-year increase in leniency applications across most jurisdictions.
Central to these reforms is the recognition that leniency only works if applicants believe they are at genuine risk of being caught and sanctioned. This is why authorities have focused simultaneously on strengthening detection, thereby increasing the value of leniency relative to settlement or silence.
Often there is an important personal element. In the UK, for example, successful leniency applicants gain immunity not only from penalties, but also from director disqualification proceedings and/or criminal prosecution, provided they cooperate effectively. This applies to both former and current directors. The CMA has made frequent use of competition disqualification orders since 2019, making this threat more tangible.
Enforcement strategies are more nuanced now, reflecting both the limitations of leniency and the growing adoption of multifaceted enforcement strategies.
This shift to deterrence and an uptick in leniency applications puts greater pressure on businesses to be prepared and ensure timely cooperation with the authorities. Regulators are evolving, and businesses need to keep up. Organisations need effective compliance programmes, clear policies, and properly trained dawn raid teams, prepared to react quickly.