Cartel Damages Research Articles

Leniency Inflation, Cartel Damages, and Criminalization

AbstractWe revisit the pros and cons of introducing cartel criminalization in the EU. We document the recent EU “leniency inflation”, whereby leniency has been increasingly awarded to many (or all) cartel members, which softens the “courthouse race” effect. Coupled with the insufficient protection of leniency applicants from damages (2014 Damages Directive), it may have led to a decrease in leniency applications and cartel convictions. Given the current level of fines, criminalization may have to be introduced. We then explore US criminal sanctions (1990–2015) to highlight potential areas of concern for EU policymakers, of which recidivism appears to be a significant one.

Why Do We Leave So Much Money On The Table? Recovering Cartel Damages: Perspectives Of Private Enforcement In Brazil

Why Do We Leave So Much Money On The Table? Recovering Cartel Damages: Perspectives Of Private Enforcement In Brazil

Trucks Cartel Damages Claims: Thousand and Odd Judgments Issued by Spanish Appeal Courts

Trucks Cartel Damages Claims: Thousand and Odd Judgments Issued by Spanish Appeal Courts

The bundling of claims in cartel damages litigation in Germany, the Netherlands, the United Kingdom, Italy and France

When pursuing damages in so-called ‘follow-on’ cartel damages claims claimants can anticipate fierce resistance from defendants. Normally, the only way for claimants to survive this legal battle is to combine forces. This is what is called the bundling of claims. This article contains a comparative study of the possibility of those harmed by cartels and other anti-competitive conduct working together as claimants by bundling their individual claims in various European jurisdictions: Germany, the Netherlands, the UK, Italy and France.

Damage Calculation and Mitigation in Retailing in the Presence of Store Brands (with an Application to the German Coffee Cartel)

Private enforcement cases to claim cartel damages have been steadily on the rise in Europe in recent years. Apart from increased public enforcement, this is also due to the efforts of the European Commission to enable such private enforcement. At least since Courage v Crehan1 and Manfredi2, it is generally accepted that any affected party can claim compensation for harm suffered from an infringement of EU competition rules.3 As manufacturers frequently sell through retailers, many follow-on cases involve retailers claiming damages from brand manufacturers. In fact, we subsequently illustrate our analysis with the German coffee cartel. In the market for coffee, but also elsewhere, store brands have become ubiquitous, at least in grocery retailing. The procurement of store brands may often not be directly affected due to the nature of production and supply of these products. For instance, in the case of coffee, the respective...

Heralds of Change: In the Aftermath of Skanska (C-724/17) and Sumal (C-882/19)

The Court of Justice of the European Union (CJEU) can be placed at the origins of the pan-European awakening of private enforcement of EU competition law. The CJEU has, in a steadfast and unwavering manner, advocated for the rights of victims of competition law infringements, elevating cartel damages proceedings from a rare sight to a well-established phenomenon. In its judgment Vantaan kaupunki v. Skanska Industrial Solutions Oy and others (Skanska), the CJEU ruled that the circle of persons liable for the harm resulting from an anticompetitive behaviour is to be determined according to the concept of undertaking as referred to in Art. 101 of the Treaty on the Functioning of the European Union (TFEU). In Sumal v. Mercedes Benz Trucks Espana (Sumal) the Court clarified under which circumstances distinct legal entities within a group of companies form one single undertaking and are thus to be made the defendant in cartel damages proceedings. The CJEU’s judgments in Skanksa and Sumal mark a certainly provisional climax in the evolution of private enforcement of EU competition law. This article aims to depict the conceptual backbone of both judgments and to explore possible consequences in regard to liability within groups of companies.

QUAIS CARACTERÍSTICAS DOS ACORDOS DE FIXAÇÃO DE PREÇOS ESTÃO RELACIONADAS A UM MAIOR DANO AOS CONSUMIDORES?

ABSTRACT Despite the deterrence effect generated by antitrust laws, the fact is that many collusive agreements end up forming in the economy. An essential task is to understand how distinct market characteristics affect cartel profits and damages. This paper develops a theoretical model to assess which characteristics of price-fixing agreements are related to greater damage to consumers. Results indicate the following characteristics as responsible for greater damage: higher product similarity (substitutability); lower elasticity of demand (in absolute values); greater number of members; higher demand potential; and a higher velocity of transactions. Price-fixing agreements that have these characteristics more intensely, in comparison to others, tend to be more harmful to consumers, and, therefore, should be prioritized by antitrust authorities regarding detection, prosecution, and punishment.

Reform of Cartel Damages Law

Reform of Cartel Damages Law

Relative Responsibility for Cartel Damages

Relative Responsibility for Cartel Damages

Estimating cartel damages using machine learning

ABSTRACT This paper presents an alternative to the workhorse linear OLS regression model when predicting “but-for” prices in cartel damage estimation. By replicating the dataset from a prominent Vitamin C antitrust case of price-fixing, I show that a supervized machine learning algorithm achieves more accurate predictions of prices based on cross-validated out-of-sample testing than the OLS model applied by the court expert. The machine learning algorithm is therefore better suited in this case to predict prices for the counterfactual scenario that no cartel existed, and to calculate damages based on those predictions. I find that the machine learning algorithm p redicts damages that are 14% lower than those predicted by the court expert's OLS model. Given that millions of dollars are usually at stake in cartel litigation cases, it is recommended that machine learning algorithms should be in the toolbox of practitioners attempting to derive the most accurate estimate of cartel-related damages.

Simple Voting Games and Cartel Damage Proportioning

Individual contributions by infringing firms to the compensation of cartel victims must reflect their “relative responsibility for the harm caused” according to EU legislation. Several studies have argued that the theoretically best way to operationalize this norm is to apply the Shapley value to an equilibrium model of cartel prices. Because calibrating such a model is demanding, legal practitioners prefer workarounds based on market shares. Relative sales, revenues, and profits however fail to reflect causal links between individual behavior and prices. We develop a pragmatic alternative: use simple voting games to describe which cartel configurations can(not) cause significant price increases in an approximate, dichotomous way; then compute the Shapley-Shubik index. Simulations for a variety of market scenarios document that this captures relative responsibility better than market share heuristics can.

Comparative analysis between the English, Dutch and French approaches to passing-on in competition cases

Several legal topics regarding cartel damages litigation have drawn special attention over the last few years, including the passing-on defence. ‘Passing-on’ in competition cases is where overcharges caused by a cartel, which affect the customers of the cartelists (direct purchasers), are passed-on by these purchasers to buyers further down the supply chain (indirect purchasers). Cartel members regularly invoke this defence as a (partial) shield against a claim for damages. The EU Damages Directive contains two important presumptions in connection to passed-on damages. This article undertakes a comparative analysis of how the courts in the Netherlands, France and England and Wales apply these presumptions in practice in their case law.

Estimating cartel damages with model averaging approaches

This research offers an easy-to-implement forecast combination procedure to deal with issues of model uncertainty when evaluating cartel damages. We combine the Mallows model averaging (MMA) method with both the dummy variable (DV) and forecasting approaches to investigate the famous citric acid cartel case during the 1990s. The path of but-for prices generated from the MMA method with DV specification lies in-between those generated from the forecasting and DV methods, supporting the theoretical properties of the MMA method that weights over different forecasts generated from various candidate models. The findings indicate that the but-for prices generated from the MMA method could serve as a useful robustness check for cartel damage estimations.

Cartel Damages and Causation—The Landmark ‘Schienenkartell II’ Judgment

In its second ruling in connection with the so-called rail cartel,1 the German Federal Court of Justice (in German: ‘Bundesgerichtshof’, short ‘FCJ’) partly upheld and partly refined its previous stance on causation in the context of cartel damages cases. A little over a year had passed since the FCJ handed down its first rail cartel ruling in December 2018.2 Ever since, courts of lower instance appeared to be uncertain about how to apply the requirements regarding the assessment of evidence the FCJ set out in that first case. The Higher Regional Court (‘HRC’) of Dusseldorf even openly defied the FCJ’s strict position on the standard of proof on the causation of damages in cartel damages cases.3 In contrast, practitioners have commended the FCJ’s second rail cartel ruling as a much-needed course correction. The FCJ...

Calculating Cartel Damages

This chapter sets out the principles and emerging practice governing cartel damages in the EU and UK. It identifies the types of damages available; the issue surrounding causation, pass-on, volume effects, and mitigation; and the methods that have been be used to estimate overcharges, volume effects, and duration of a cartel. A version of the chapter is to appear in Research Handbook on Cartels, Peter Whelan, ed., Edward Elgar.

The impact of EU cartel policy reforms on the timing of settlements in private follow-on damages disputes—an empirical assessment of cases from 2001 to 2015

Abstract Private cartel damages litigation is on the rise in Europe since early 2000. This development has been initiated by the European courts and was supported by various policy initiatives of the European Commission, which found its culmination in the implementation of the EU Directive on Antitrust Damages end of 2016. This article explores the impact of this reform process on effective compensation of damaged parties of cartel infringements. For that purpose, we analyse all European cartel cases with a decision date between 2001 and 2015, for which we analyse litigation activity and speed. Overall, we find a substantial reduction of the time until the first settlement (increase in litigation speed) together with a persisting high share of cases being litigated (high litigation activity). This supports the view that the reform not only increased the claimant’s expectation about the amount of damages being awarded but also resulted in an alignment in the expectations of claimants and defendants in the final damages amount, ie the European Commission succeeded in reaching its objective to clarify and harmonize legal concepts across Europe.

Here to stay: regression analysis in follow-on cartel damages

Private damage claims that follow after a competition authority's infringement decision require an accurate estimation of the harm caused, in order to avoid under- or over-compensation. The right method for valuation of damage will depend on the specifics of a particular case, and will need to balance the need to allow for a sufficient level of detail, while remaining tractable and practical for the case overall. Regression analysis is often the method that best balances these competing objectives. This article discusses the increasing use of regression analysis in follow-on damage claims in Europe. It outlines possible reasons why this widespread application of regression analysis is not yet extensively reflected in final judgments by national courts, and considers how this may change in the future. It concludes that the regression analysis is here to stay.

Big Bang in Dortmund: Offhand Free Estimation of Cartel Damages

The Regional Court of Dortmund caused a stir again. Most recently the court considered the right of the undertaking to claim damages itself. This time it was about the estimation of the amount of damages caused by cartels. In the past, German courts in general were very reluctant to estimate damages under Sec. 287 ZPO (German Code of Civil Procedure). However, the Regional Court of Dortmund has now for the first time taken the opportunity to estimate cartel damages according to its own free conviction and discarded the usual restraint with an damage estimation of 15 %. The author discusses the relevant findings of the case and concludes that the judgement - when adopted by other German courts - will benefit Germany's attractiveness as a forum for cartel damages claims.

Arbitrability of Cartel Damages Claims in the European Union

In this article, I decided to discuss the topical question of whether and, if so, in what circumstances, cartel damages claims can be arbitrated in the European Union. International arbitration plays a central role in resolving disputes in the international business community. It is often considered speedier and more cost-effective than litigation. It gives the parties a similarly final and enforceable award to litigation, but with considerable advantages in terms of the choice of the arbitrators, procedural flexibility and neutrality of the forum. As such, it is considered favourably by most legal systems.

Claiming Cartel Damages against the Economic Unit: One for All and All for One?

The article argues that all legal entities forming part of an in the sense of Artt. 101, 102 TFEU which violated competition law are equally liable for damages caused by the infringement. In that, it explains that neither the principle of separation under corporate law nor individual responsibility are in any way affected by this, since the synchronism of action and sanction (actio and reactio) is just as much provided as it is guaranteed under Art. 101(1) TFEU. Hence, in light of the economic unity doctrine it seems hardly contestable that all parts of an undertaking are equally liable for cartel damages and can therefore be sued before the competent national courts, regardless of their hierarchical standing within the unit's corporate structure. Despite frequent criticism, a broad group of potential debtors in no way expands the scope of the cartel victims' rights, nor does it lead to over-compensation, since the amount of the debt exclusively depends on the economic harm inflicted through the infringement. What actually is at issue, rather is a simplification of private enforcement of compensation rights which de lege lata already exist anyway. However, plaintiffs who cannot prove in court that they actually suffered damages will still fail with their claims, regardless of whether the action is brought against the parent company, its sister or any of their subsidiaries.