Asia-Pacific | Europe | North America
Quantifying antitrust
damages
(A Few) Economist’s remarks
Barbara Veronese, CEG Europe
AAI Conference - Rome, 24-25th September
The Directive : tricky trade-offs in
establishing the quantum
• Very clear «just compensation standard»
• Economist’s translation: high standard for quantification
• Over compensation MUST be avoided (on each level of the supply chain if there
are chances of claims from indirect buyers)
• But then … standard of proof must not turn this into “mission impossible”
• “not render the exercise of the right to damages practically impossible or
excessively difficult”
• Courts can estimate damages when there is harm “but it is practically
impossible or excessively difficult to precisely quantify the harm suffered on
the basis of the available evidence”
• Cartels: how often will it be impossible to practically quantify damages?
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High level overview- serious
quantification is happening!
• Follow on cases damage claims are increasingly frequent, in courts and
outside the realm of court proceedings
• Some key jurisdictions, but there numerous “chunky” cases elsewhere
outside the borders of the usual three (UK, DE, NL)
• Across all jurisdictions, serious quantification efforts in empirically
─ Modelling the counterfactual
─ Analysing overcharges
─ Quantifying damages from overcharge estimates ( pass-on with
“distributional” issues on the supply chain, output effects, appropriate
uplift!)
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“Just” compensation in practice
• Visualise some common themes in damages quantification across cases
1. Businesses are capable to provide significant amount of data and
other information (e.g. pricing strategies, features of the competitive
environment)
2. We see typically high stakes - relatively large businesses
3. Frequent use of econometrics and simulations (a lot more than not
simple before and after comparisons)
4. Pass on discussions and empirical analysis
• Across jurisdictions (Czech Republic, Italy, France, Finland, Germany,
the Netherlands, United Kingdom and more)
• Both for court cases and for alternative routes to damage compensation
(settlement processes)
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Quantification challenges differ
for 101 or 102
• Need to find a reasonable measure of difference between
market outcome and counterfactual in all cases
• Art 101: typically lots of transactions have taken place.
Claimants and defendants do have the data
• So what is really helpful from public enforcers’ decisions?
• Clarity on start and end periods of the infringement
• Clarity on boundaries of affected market (product and geography analysis)
• Whether or not there were effects [ with caveats!]
• Art 102: less data around (market never born, competition did not take-off,
new dynamic markets)… more assumptions
• but … even in 102 cases the same benchmarking techniques are helpful
with a clever search of a meaningful benchmark
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Presumptions and prejudices
• The new Directive brings a presumption that cartels are harmful… that is
to say we can start with a (rebuttable) prior that overcharge is above zero
─ If goal of compensation this is a helpful starter for court cases ; nonzero effects may indeed be a better starting point than zero effects
─ However, this does not provide guidance on quantum: no good to
have 10% rule of thumb figure if overcharge was about 40% (…nor just
compensation would be assisted by a 20% figure if effect was 3-5%)
─ Let’s say the Directive has zero-guidance on quantum, it has to be case
specific
─ Presumptions on passing on…(for another speaker!)
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Presumptions and prejudices
• Too complex for judges…. But judges are used to call on experts (financial
derivative, medical, ballistic, IP)
• There is little data… companies have transaction records for years- easier and
easier to retrieve data in the digital era
• Too lengthy: often timing and costs are not significantly impacted by the
economists’ quantification exercise
• Econometrics and economics «ephemeral» and less fundamental
• Our toolkits which are some decades old – quite settled understanding
• No need to over complicate / may overcome data issues: commitments,
benchmarking, qualitative evidence, «natural experiments» reasonably
assessing damages ranges from evidence
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Bitter truths? The bar is set high
• We are likely to see claims only if the stakes are high
… thus overall large buyers much more than small buyers
or final customers
• In this «self-selected» bundle of cases some serious data crunching is
justified and appropriate…
…Common-sense quantification is black-box quantification!
• Difficulties imply that private enforcement will remain business to
business for a while
….unless small buyers can easily aggregate(opt out), finance the claim, find
other helping hands (e.g. CMA voluntary redress process).
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Constraints to private
enforcement / good settlements
• Public enforcers’ decision binding, privileged proof… fine… but contains
little on quantum. Are public enforcers to tell us more on effects?
– Then raise the standards of decisions as concerns effects (evidence &
analysis need to dig deeper)
– Engage with the parties/businesses to base analysis on solid
information and first class process to handle it
• Some public enforcement tools may be an issue?
– Settlements in public enforcement (much more then leniency) “bury”
evidence?
–- Closing cases with commitments? Depends on the commitment
• Judges may not know who are the «experts»
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Quantification aim for best practice:
it is out there… within reach
• Let’s not be shy: some methods are better if there is data
• Rules of thumb are at odds with the declared goal of the directive
• Cases out there already encompass financial methods, benchmarking on
commitments, and various ways to use econometrics (time comparison or
benchmarking or, much better, both)
• Simple methods should really be last resort
─ It is important not to mix effects of market change and of the infringement
─ The same methods widely used also for policy assessment, medical
science, stakes are high enough to care?
─ Models and statistics are criticized but the alternative is to allow for even
more discretion and less of a shared methodological basis?
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Thank You!
Barbara Veronese
Partner, CEG Europe
Milan
Piazzale Biancamano 8, 20121
Brussels
Avenue Louise 367, 1050
T / + 39 0262032178
M / +39 3482435612
E / [email protected]
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