Textbook Cartels versus the Real Deal: Should We Be Surprised if Some Cartels Do Not Lead to Damage?

Abstract

The damages directive recently adopted by the European Parliament and the Council contains a rebuttable presumption regarding the damage presumably caused by cartels. This rebuttable presumption, while allowing a reversal of the burden of proof which may be procedurally justified in facilitating damages actions by claimants, should not be misconstrued as evidence for the view that cartels prosecuted by competition authorities can generally be expected to have caused harm. Fundamentally, the idea that cartels cause damage is at the origin of the legal assessment of cartels as restrictions by object. From an economic point of view, this is plausible for those cartels that are typically discussed in economic textbooks. In many prosecuted cartels, however, the conduct in question deviates markedly from such textbook scenarios. This paper discusses several types of such conduct found in recent cases. While the theoretical analysis presented in this paper does not and cannot answer the empirical question whether damage did or did not occur in any particular case, it shows that for some types of conduct there is no obvious economic theory of harm giving rise to the expectation of damage. In such cases, it is plausible that a detailed quantitative analysis does not find any damage. Competition authorities prosecute and fine cartel conduct as such and typically do not carry out an analysis of damage caused. In the context of damages claims, however, such an analysis is at the heart of the matter. The general belief that any conduct labelled as cartel will always and everywhere cause damage stands in the way of a scientific and objective assessment of actual damage caused that has to be at the centre of damages claims.