9 Quantification of Damages

Subject(s):

Cartels — Abuse of dominant position — Economics — Private actions — Quantifying harm

This chapter deals with the economics of quantifying damages. A growing number of damages actions are brought before national courts by victims of cartels and other competition law infringements. The chapter sets out conceptual frameworks for estimating the harm from cartels (mainly the cartel overcharge) and exclusionary practices (lost profit). It presents a classification of approaches that can be used to quantify damages: cross-sectional comparisons; time-series comparisons; difference-in-differences comparisons; financial-analysis-based approaches; and market-structure-based approaches. For each of these approaches various quantitative techniques can be applied, ranging from the relatively simple (such as comparison of averages and interpolation) to more sophisticated econometric techniques. The chapter also addresses the economics of pass-on in the context of the passing-on defence in damages actions, and the principles behind interest and discounting, usually the final (but relatively unexplored) step in damages calculations.