In this paper, we analyze a game between firms and an antitrust authority that has imperfect knowledge about production cost and no commitment to its auditing policy. We …find that for a relatively heavy weight of consumer surplus in the antitrust authority’s objective, the game has a unique equilibrium using mixed strategies in which only low-cost firms collude. Moreover, not only the severity of the fine has a deterring expect, but in the presence of substantial under-deterrence, it is also a complement to the probability of auditing. Finally, we demonstrate that for sufficiently low prior beliefs about the realization of low-cost firms, the antitrust authority would be better o¤, ex post, if it took only the consumer surplus into consideration.

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