CEO Turnover and Shareholder Awareness in Cartel Cases

We examine the consequences of cartel detection for the careers of CEOs in the US and the EU; the characteristics of colluding CEOs (e.g., tenure, age); and shareholders’ awareness of management misbehavior. Additionally, we examine at what level cartel decisions are made according to the available case documents. We find that only 4% of all CEOs in convicted EC cartel firms (1998-2020) are explicitly fired due to collusion, and that 30% of CEOs indicted in DOJ cartels (1985-2011) are fired. Often, CEOs remain in place or take on other high-level positions in the firm. This suggests that (most) shareholders are not trying to prevent managers from colluding, and therefore that the expected sanctions are still too low to deter cartels through appropriate changes in corporate governance. This is particularly true in the EU, where fines are less severe than US ones, and there are neither criminal sanctions nor treble damages.