This paper – which can be found here – looks at who should have standing in private cartel damages claims.

It is an economics paper, so it engages in a normative / most-efficient analysis of who should have standing to claim damages for antitrust infringements. It also looks into both the US and EU’s legal system in detail, to see whether / how their proposal could work.

Their main argument is that cartelists should also be liable for damages caused to firms that supply the cartel or the cartel’s customers with complementary product components. What connects these classes of firms is that they may suffer a loss due to cartel‐induced underpayment. In response to the cartel’s output reduction, they may find it a profit‐maximizing strategy to lower their prices to mitigate the decline in demand, thereby effectively reducing the damage to the cartel’s purchasers.

In particular, the authors develop a model which purports to demonstrate that the allocation and distribution of surpluses does not depend on the way that the selling of a complementary product is organized under both competition and cartelization conditions. From this, a prima facie argument can be inferred according to which producers of complements should be treated alike under cartel damages laws, regardless of whether they act as purchasers from the cartel, as suppliers to the cartel, or as suppliers of the cartel’s customers.

The paper is structured as follows: Part II outlines the legal status quo with regard to antitrust standing in the U.S. and in the EU, and looks at how the law fits with the concept of optimal deterrence and with models that seek to establish the optimal amount of cartel damages. In Part III, the paper looks at how the calculation of the (direct) purchaser cartel overcharge takes into account  cartel effects on suppliers and on separate sellers of complements, and looks at the economic effects of cartelization on the market for complementary products. In Part IV, the authors discuss several policy considerations beyond optimal deterrence that may support or militate against a broad concept of antitrust standing. In Part V they set out legal implications. Part VI concludes.

The authors do have a point that it may be rational for cartelists to reduce output and prices – in which case, under the applicable tort principles, it is unclear whether private damages will have to be paid. This is ultimately a variant of the problem that the amount of cartel overcharge does not necessarily reflect the actual economic harm caused by a cartel, since it may not reflect the reduction in output that will be caused by increased prices and does not take into account deadweight losses, and it seems to be the reason behind the authors’ attempt to advance the proposed approach. However, since the authors “investigate markets for products or product bundles characterized by perfect complementarity, [where] the postulated one‐to‐one relationship in the use of the different components provides a clear and relevant case of product market interaction between the components contained in the final good or service”, it is unclear how much their results can be extrapolated to other scenarios in order to justify their proposed expansion of standing to claim for cartel damages. This may be an area for further work.

In any event, the paper provides a good overview of the EU and US systems of private damages, and how they fit in the context of (law and economic) theories of optimal deterrence

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