Cartel Damages - Principles, measurement and economics

Oxford University Press, 2020.  Order here

Cambridge University Press, 2007

 Institute of Economic Affairs,
2nd edn, 2006


Guide to use of economics in State aid cases

SSRN Electronics Journal, January 2020

Akos Reger and Cento Veljanovski have collaborated to show how economics is increasingly used to assess state aid measures. In light of the economic theory and the case law they outline the application of economics to the market economy investor principle (MEIP), and in the assessment of the ‘necessity’ and ‘proportionality’ of the aid given.  They also discuss the economic interpretation of the concept of ‘well run’ undertaking under the 4th Altmark criterion.    

European Cartel Fines in 2019

Case’s Annual Review, 7 January 2020

Case has published its Annual Review of fines imposed on cartels by the European Commission during 2019.  

During 2019 the Commission imposed fines of  1,469 million on five cartels involving the supply of car parts, forex trading and canned vegetables.  Remarkably these fines were less than the amount given to the cartelists in reductions for leniency and settlement, Had these not been given the fines paid by the cartelist would have been 3.4 billion or 130% larger. 

All cartels were detected by whistelblowers and all were settled with the Commission. Other features of the five cartels are given in the Annual Review.

The Commission also undertook two ‘dawn raids, commenced one proceeding, issued one Statement of Objections, re-adopted one decision (Reinforced steel bars) following 12 years of legal wrangling in the courts, and published three full and summary decisions of cartels prosecuted in earlier years. 

Cartels, Sustainability and the Public Interest Defence

Trust on the Market, 30 December 2019

Cento Veljanovski contributed a timely blog to the Truth on the Market website entitled Efficient Cartels and the Public Interest Defence – Do They Exist?  This examines whether the consumer welfare and efficiency (or total welfare) standards conflict when considering cartels in industries with large fixed costs or those where there are environmental concerns.

The central issue is whether Article 101(3)TFEU of European antitrust should and can be expanded to take account of the wider social costs and benefits while preserving its integrity and coherence.

The blog is based on Cento’s talk to the Vinson Centre’s law and economics conference held at the University of Buckingham in early December 2019

Court of Appeal re-sets bar to UK Collective Certification

Competition Law Insights, June 2019

In a landmark judgment delivered on 16 April 2019 the English Court of Appeal set aside the Competition Appeal Tribunal’s (CAT) order refusing to certify Mr Merricks’ £14 billion damages claim against MasterCard for charging excessive interchange fees.  The Court held that it was not appropriate for the CAT to conduct a ‘mini trial’ on the merits of the claim and to refuse certification because the proposed method of distributing the award of aggregate damages was not compensatory.  The decision has been appealed to the Supreme Court to be heard in May 2020.  In the meantime all class certification actions have been halted. 

European Cartel Fines in 2018

Competition Law Insights, 2019

Case’s annual survey of European Commission cartel fines has been published. The European Commission completed four investigations in 2018 comprising five cartels/infringements.  Aggregate fines of euro 800 million were imposed after leniency and settlement discounts.  The Commission undertook two ‘dawn raids’, commenced one proceeding and issued one Statement of Objections.  Fines were lower than in previous years.  The Commission’s targeting of the automotive sector continued. 

Article shortlisted for Antitrust Writing Award 

Cento Veljanovski’s article  Credit Cards, Counterfactuals and Antitrust Damages was shortlisted as one of the best article on antitrust in the 2019 Antitrust Writing Awards organised by Concurrences Review and the George Washington University Law School Competition Law Center.  The article appeared in the Journal of  European Competition Law & Practice.

Comments on EU Draft Pass-on Guidelines 

Response to European Commission’s consultation

Cento Veljanovski’s submitted a response to the European Commission’s consultation on its draft Guidelines for national courts on how to estimate the share of overcharge which was passed on to indirect purchasers.  In summarising his detailed assessment Cento concludes: 

“In my view the draft Guidelines do not adequately achieve their stated purpose. They are strong on economic principles, theory and descriptions of some quantitative methods, cover data requirements and disclosure reasonably well, but do not offer real practical guidance that would enable a generalist judge to assess the proposed quantitative methods and conflicting expert opinions; nor do they guide the court in how in the absence of data and evidence and/or conflicting evidence to estimate pass-on.’ 


Collective Certification in UK Competition Law 

World Competition, 2019

The certifications of the first two opt-out collective actions – Gibson v. Pride Mobility Scooter and Merricks v. MasterCard – were dismissed by the Competition Appeal Tribunal (CAT) under the new UK competition law ‘class action’ regime. Here a critical assessment of the CAT’s two judgments is undertaken focusing on common issues, pass-on, distribution of damages, costs and funding of the emerging UK collective certification process.  A revised version will be published in World Competition Law & Economics.

Credit Cards, Counterfactuals and Antitrust Damages

Journal of European Competition Law & Practice, 2018

The English courts in Sainsbury’s v. MasterCard and Morrisons v. MasterCard came to opposite conclusions on the illegality of MasterCard’s multilateral interchange fees (MIFs). While both courts posited bilateral counterfactuals, the Competition Appeal Tribunal (CAT) in Sainsbury’s held that this was a realistic counterfactual and that MasterCard had infringed Article 101(1); while the High Court in Morrisons found that the bilateral counterfactual was not realistic because MasterCard would not survive if faced with competition from Visa’s higher interchange fees. The courts also used very different methods to calculate the counterfactual interchange fee.  Here a critical assessment of the reasoning underpinning the two judgments is undertaken. The central thesis is that the counterfactual approach is flawed because of the constrained nature of and procedural constraints arising in litigation.

The Law and Economics of Pass-on in Price Fixing Cases

European Competition Law Review, 2017

Sainsbury’s v. MasterCard establishes the pass-on “defence” in English/UK law. The Competition Appeal Tribunal set out a two-part test which it erroneously distinguished from the economists’ notion of pass-on. It then went on the develop key elements of legal test for pass-on in price fixing cases. This article critically assesses the Tribunal’s judgment within a law and economics framework. It provides a rounded interpretation of pass-on as both a defence and offence, the different evidentiary standards and principles used, and the potential for inconsistency which could see defendants liable to claims more than the overcharges.

A Statistical Analysis of UK Antitrust Enforcement

Journal of Competition Law & Economics, 2014

The UK Office of Fair Trading (OFT) was a highly rated competition law enforcer. Yet its antitrust performance fell far short of this image. Here a critical and empirically based assessment of the OFT’s antitrust enforcement activities is undertaken and the claim that they had a “significant deterrent effect”. It concludes that this evidence is flawed and not credible.

Market Power and Counterfactuals in New Zealand Competition Law

Journal of Competition Law & Economics, 2013

This article reviews recent decisions and controversies surrounding the counterfactual test under section 36 of the New Zealand Commerce Act 1986. In 2010, the Supreme Court in 0867 affirmed the counterfactual as the test to determine whether there has been a “use” of market power for a proscribed purpose. The discussion traces the development of the section 36 counterfactual, and concludes that it is flawed and underinclusive. It also compares it to the use of the counterfactual under the identical section 46 of the Australian Competition and Consumer Act 2010, which is used more flexibly.

Margin Squeeze – An overview of EU and national case law

Competition Case Law Digest, 2013

This article reviews the law and economics of an anti-competitive margin squeeze as been developed by the European Commission and national competition authorities together with a critical assessment of the European Court of Justice’s Telia/Sonera judgment in early 2012.

Third Party Litigation Funding in Europe

Journal of Law, Economics & Public Policy, 2012

Based on interviews of all UK based third party litigation funders the article provides empirical evidence on the nature, extent and type of third party funding of litigation. It also examines the emergence of new group of third party funders in Europe focused on follow-on cartel damage claims. The discussion considers policy questions such as the justification for third party funding and its impact.

Mergers, Counterfactuals and Proof after Metcash

Australian Business Law Review, 2012

The standard of proof in merger cases has become controversial  and confusing after the Federal Court’s decision in Metcash. This article reviews the use of counterfactuals and the inconsistencies inherent in the ‘real chance’ standard of proof. It also critically examines the different approaches in Metcash, and the more formal approach by the New Zealand High Court in the Warehouse decision. These are assessed using probability theory. The discussion also examines the use of counterfactuals in market power and anticompetitive practices cases in Australian and New Zealand competition laws.

Deterrence, Recidivism and European Cartel Fines

Journal of Competition Law & Economics, 2011

Based on an empirical analysis of cartel prosecutions from 2007, this article determines how the European Commission fines cartels.  The fines are compared with those imposed by the European Commission during 1999 to 2006. The main findings are that, while fines have increased significantly, this has been due mainly to less generous reductions under the Commission’s leniency program; and that in some areas the Commission has not followed its own guidelines. Estimated fine-to-sales ratios together with new research on overcharges and detection rates suggest that fines may be closer to those for optimal deterrence than previously thought.

Counterfactual Tests in Competition Law

Competition Law Journal, 2010

This article looks review the growing use of counterfactuals in European and UK competition laws based on a review of UK and EC competition guidelines, decisions, and several leading UK cases. It offers a critical assessment of the concept, the way it has been applied in the case law, and the pitfalls.

Network Effects and Two-sided Markets

King College London,  Diploma/Masters in Economics of Competition Law, 2008

This module sets out the law and economics of network effects and two-sided or multi-sided markets.

Cartel Fines in Europe – Law, practice and deterrence

World Competition, 2007

This article examines the law, practice and evidence on fines for price-fixing under European competition law. It is the first comprehensive quantitative analysis of European cartel fines based on 30 fully reported cartel decisions and appeals. It also examines the impact of the amended 2006 penalty guidelines.

Economics of Cartels

Finnish Competition Law Association Yearbook 2006

This chapter sets out the basic economics of cartel formation and stability, the methods of estimating overcharges and but for prices, and concludes with a brief discussion of multiple damage claims for price-fixing. It draws on recent cartel prosecutions decisions of the European Commission.

Price Squeezes, Foreclosure, and Competition Law – Principles and guidelines

Journal of Competition & Regulation in Network Industries, 2003

This article looks at the definition, conditions and evidence necessary to establish that a price squeeze is an exclusionary abuse under European competition law. It shows that the necessary conditions are demanding, and that the empirical test for a price squeeze must be carried out carefully. It offers practical guidelines for indentifying an exclusionary price squeeze and on the appropriate calculation of downstream margins (the “imputation test”).

Close Menu