Damage calculation

Determining the hypothetical "but-for" competition  price is an important component for the evaluation of damages caused by infringements of the antitrust law. The underlying simulations and estimations are performed by the experts of EE&MC. The applied methodology ranges from comparing simple time series to technically ambitious econometric modelling and simulations.

EE&MC methods

The simplest way is the "before-and-after" method. Within this framework the difference between the competitive price and the cartel price is used to determine the damage. However, this method requires no changes in market conditions.

Another, but more effective method, is the "reduced-form" multivariate-regression. This approach constitutes an extension of the simplest method as it allows changes in market conditions. The acceptance of changes permits the usage of explanatory variables, which results in more precise predictions of the hypothetical "but-for" price.

If other markets or products constitute a reliable reference value, the "Yardstick" approach provides an alternative for determining the damage. But this requires similarity between the products or markets under competition as well as under the cartel.

The development of a structure model including the simulation of the difference between the hypothetical competition price and the cartel price is the most ambitious, but also most precise method. Such a simulation model requires specific assumptions about the structure of demand and supply. The EE&MC economists have various experiences in specifying these assumptions and the calibration of the model.

However, in doing so, the analysts at EE&MC select the appropriate method conditional on the available data and the reliable assumptions. After the determination of the hypothetical competition price the calculation of damages is straightforward.

EE&MC-techniques

EE&MC has years of experience in determining cartel damages and the utilization of diverse underlying techniques like:

Furthermore, the techniques used by EE&MC for the calculation of cartel damages find acceptance by national courts.