Full compensation and the volume effect: assessing different policy options

Abstract

ABSTRACT According to the Damages Directive victims of infringements of competition law are entitled to full compensation. To achieve this goal overcharges, passing-on, and volume effects should play a role in the calculation of damages (for any purchaser who is not yet the final consumer). Whereas the Damages Directive promotes the passing-on defence for the defendants, it does not regulate volume effects in depth. The computation of these effects requires information on counterfactual prices and quantities. Since this information cannot be observed, the size of the volume effect tends to be uncertain. This paper discusses policy-options that aspire to bring compensation closer to full compensation, given uncertainty about the size of the volume effect. Based on the maximin-principle, a principle for decision-making under uncertainty, not allowing a passing-on defence appears to be an attractive option since this may lead to the minimization of the maximum gap between actual and full compensation.