In short, the argument of this paper – which can be found here – is that there is an undue focus on overcharges when talking about cartel damages. The authors argue that significant losses can be suffered as a result of volume effects as well, i.e. from reduced sales / purchases as a result of the higher price that results from a competition infringement.

This has implications in terms of standing, since victims of volume effects may not be allowed to bring claims for damages. This is mistaken, and standing should be granted to victims of volume effects.

The argument is developed as follows:

Part II outlines the law on antitrust standing in the U.S. and the E.U., as well as the basic economics of cartel damages and optimal deterrence.

In the US, only direct purchasers or sellers have standing to claim antitrust damages, alongside some victims of ‘umbrella pricing’ (i.e. when non-cartelists raise their prices as a consequence of a competition infringement). This restrictive concept of standing is concerned with ensuring the effective private enforcement of antitrust laws. As a result, claims based on volume effect seem not to be allowed.

In the EU, standing for antitrust damages is a work in progress – and its development is governed by the principle of effectiveness under EU law. Standing is ultimately a matter of national law, subject to compliance with EU law. The European courts and the Damages Directive have made it clear that direct and indirect purchasers have standing to sue, as do victims of ‘umbrella pricing’. However, it is still unclear whether suppliers or component makers which have suffered losses as a result of volume effect will be entitled to claim damages – under national and EU law.

The authors then try to develop a benchmark for whether these approaches are normatively desirable. They start from the premise that private damages are part of a number of tools that seek to deter anticompetitive behaviour. From this perspective, the question is whether a specific concept of standing contributes to optimal deterrence. They find that, while there are legitimate concerns about over-enforcement as regards conduct which lawfulness is dubious, for cartels such concerns are overblown. In particular, they find that: ‘First, the actual deterrent effect of cartel damages claims depends on a number of legal aspects other than the rules on antitrust injury and standing. (…) Second, if the damage caused by a cartel to a category of market participants represents part of the deadweight loss or part of the rents pocketed by the cartelists, a recovery of this type of damages, as such, may never entail a risk of over-deterrence. In contrast, to refuse standing to those parties may cause a risk of systematic under-deterrence.’  This is particularly the case because victims of cartels may decide to lower prices to offset the impact of volume effects, but this will lead to a reduction in damages to be awarded as a result of this damage mitigation on the victims’ part. Consequently, deadweight losses risk going uncompensated.

Part III considers the economic effects of cartelisation on the market for complementary products.

The authors build a model that assumes that markets for products or product bundles are characterised by perfect complementarity. Cartelisation in the sales of one component will usually have strong effects on the performance of firms producing other complementary components. According to U.S. antitrust practice, such firms can bring an action for damages only if they are direct purchasers of the cartelised component.

However, the paper’s analysis reveals that economic effects are driven by the degree of complementarity and not by the particular market organization in place. This is because there are three ways in which cartelised products can influence the use of complementary products: (i) the manufacturer of complementary products purchases the cartelised product and uses it as input; (ii) the complementary products’ manufacturer sells its products independently of the cartelised product; (iii) the manufacturer of the cartelised product sells its products to the manufacturer of the complementary product, which will sell it to final consumers. All these cases create the same volume / deadweight effects; they all lead to similar net losses as a result of these effects; but, under, US law at least, only in situation (i) will the manufacturer of complementary products be able to claim damages, because in that situation the manufacturer of complimentary products will be a direct purchaser.

This means that the different legal treatment of similar economic situations is unjustified; and that denying suppliers and separate sellers of complements a right to claim losses created by volume effects risks systematic under-deterrence, which may not be completely offset by a corresponding over-compensation of the cartelist’s (direct) purchasers.

Part IV discusses several policy considerations that may support or militate against a broad concept of antitrust standing.

In particular, they consider that granting standing to suppliers and complement sellers would:  be beneficial because they: (i) are in a good position and may benefit from  incentives to identify a cartel; (ii) do not suffer from cartelists incentives to collude with purchasers to prevent them from uncovering the cartel by passing on part of the overcharges.

Calculating the exact and complete amount of damages that a cartel inflicted on a supplier or a separate seller of complementary goods requires constructing a but-for scenario that is necessarily more complex than the calculation of a cartel overcharge suffered by a direct purchaser. This higher level of economic complexity certainly entails higher social costs in terms of costs incurred on the part of the judicial system, such as fees of economic experts and lawyers, as well as risking increased error costs. However, one should not underestimate the innovative capacity of private plaintiffs and, in particular, of the considerable number of law firms and consulting economists that specialise in cartel damages actions and that compete with each other.

Another argument against extending standing to suppliers and complement sellers is that it may increase the number of unmeritorious claims. However, ‘preventing meritless claims should not be considered a sufficient reason to deny standing to certain categories of plaintiffs, solely on the grounds that the type of cartel damage they claim to have suffered seems rather remote or difficult to prove. Rather, unmeritorious suits should be discouraged through procedural arrangements—in the U.S. context, for example, by adjusting the standard for defendants to obtain summary judgment and for plaintiffs to survive a motion to dismiss.

Part V sets out the legal implications from the analysis in the previous sections.

In short, ‘the assumptions which underlie the rigid concept of antitrust standing under U.S. law have to be considered ill founded’. As regards EU law, the authors’ think that the principle of effectiveness, as applied to the right to compensation, mean that denying standing to suppliers and component sellers would infringe EU law. However, a specific legislative statement to this effect would have been preferable – it is thus a shame that the Damages Directive is silent on the topic.

Part VI concludes.


This is a thoughtful and thorough paper – as I read it I kept coming up with hypothetical objections, only for the next section to address them. It again raises an issue which seems to be inherent to private competition enforcement: ensuring the effectiveness of competition damages claims seems to imply a risk of over-compensation of the claimants. The paper expressly argues for the widely (if only implicitly) accepted proposition that such risks are limited, and worth incurring as regards cartels. Their formalisation of this argument is particularly interesting.

The paper, however, starts from a dubious (or at least not consensual) premise: that the goal of private enforcement is to achieve maximum deterrence. This may make sense in the US (arguendo), but the goal of private enforcement is the compensation of losses in Europe, as is typical of tort law. Obviously, deterrent effects are inherent to a well-functioning non-contractual liability system; but such effects are purely incidental one. It seems dubious at best that the private enforcement of competition law seeks to achieve optimal deterrence in Europe: if anything, this must be the goal of the competition system as a whole, taking public enforcement into account.

Given that, I cannot share the authors’ normative argument based on optimal deterrence. Instead, I think that the authors’ argument for extending standing to suppliers and manufacturers of complements based directly on compensation-based concerns is much more persuasive, even if it is only argued summarily.

I am also not persuaded by the arguments developed to demonstrate that extending standing to suppliers and complement sellers will not have significant institutional impact. Personally, I do not see why claims based on volume effects should not be brought. Under EU law, I think the better approach is that such claimants will have standing. Nonetheless, a concern underlying rules on standing is to prevent excessively litigation and ensure that only claims with sufficient chances of success are brought. Proving volume effects is bound to be very onerous, and extremely difficult to do – much more so that calculating the amount of an overcharge. As such, there is a valid argument to the effect that the costs of allowing claims (or defences, for that matter) based on volume effects may outweigh the social benefits of allowing such claims in the first place, particularly if deadweight losses can be reflected in fines resulting from private enforcement (as the authors say, ‘courts regard the infringements inflicted upon suppliers and separate sellers of complements as too complex and costly to prove (“speculative”). Thus, they insist on a narrow concept of antitrust standing out of fear that an increased number of unmeritorious antitrust suits might unduly burden the court system.’). The authors address this argument, mainly by saying: ‘this is all true, but why not grant standing and then control whether the claim is meritorious through subsequent procedural mechanisms?’ This struck me as being a stronger argument than the lengthy exposition based on optimal deterrence – but it also begs the question of why we should ignore the costs inherent to such an approach. In this case, it actually begs a discussion of the topic – but the authors simply state: ‘we believe that these concerns should have less impact.’ I am ready to be convinced, but I will need a better reasoned argument.

A last point is that the authors treat situations where manufacturers of complementary products reduce their sales as a form of passing on, because the manufacturer is thus saving costs. This is undoubtedly correct from an economic standpoint. Legally, however, it runs against a significantly more restrictive approach to passing on adopted in judgments by a number of national higher courts. This is too complex a matter to address here (you can read my article on the topic when it comes out later in the year, if you want); but it is again relevant to my oft-repeated argument that economic analyses of legal rules may not be as relevant as it would seem at first.

In this case, I broadly agree with the authors’ conclusions – but I do so for different reasons than those developed in this paper.

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