Law and Practice
- Elgar Competition Law and Practice series
An economically founded quantification of the damage caused by competition law infringements has increased in importance in particular through the advancement of competition law damages actions in the EU. Damages claims are increasingly brought, in particular as follow-on claims, and it is very likely that this trend will continue in the future. If a damages claim is presented in court and compensation of the harm suffered is sought, quantifying the level of the damage suffered becomes necessary. On the basis of these developments several theoretical and applied studies investigating the fundamental economic principles and empirical-econometric methods to determine damage have been presented in the last few years with the aim to provide guidance to the courts on how the quantification of damage should be approached and what aspects have to be taken into consideration. Estimates of the magnitude of damage caused by competition law violations show that they are quite substantial. The empirical literature concerned with estimating aggregate damages has so far, however, exclusively focussed on cartel cases. Empirically estimating the total damage caused by all cartels is, however, conceptually very difficult, as the total number of cartels is unknown and only discovered cartels can be analysed. The damage caused by European and national cartels have therefore been estimated using simplifying assumptions. Presuming a certain detection rate, it is possible to estimate the number of existing cartels. By further assuming a relationship between fines and damage caused, the harm inflicted by cartels in Europe was estimated.
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