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Estimating consumer damages in cartel cases

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  • Laitenberger, Ulrich
  • Smuda, Florian

Abstract

We use consumer panel data to calculate the damage suffered by German consumers due to a detergent cartel that was active between 2002 and 2005 in eight European countries. Applying before-and-after and difference-in-differences estimations we find average overcharges between 6.7 and 6.9 percent and an overall consumer damage of about 13.2 million Euro over the period from July 2004 until March 2005. Under the assumptions that the cartel-induced share on turnover is representative for the entire cartel period and all affected markets, the overall consumer damage would even sum up to about 315 million Euro. Our results further suggest that the retailers reacted to the price increases of the cartel firms via price increases for their own detergent products, resulting in significant umbrella effects. We quantify the damage due to this umbrella pricing to a total of about 7.34 million Euro. With respect to the discussion whether special procedures for bringing collective actions should be available in the EU, our results are important to the extent that we show how consumer associations can use consumer panel data in order to claim damages before national courts and thereby actively fulfill their mandate of consumer protection. --

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Bibliographic Info

Paper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 13-069.

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Date of creation: 2013
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Handle: RePEc:zbw:zewdip:13069

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Keywords: cartels; damages; consumers; detergents; private damage claims;

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  1. Bueren, Eckart & Smuda, Florian, 2013. "A primer on damages of cartel suppliers: Determinants, standing US vs. EU and econometric estimation," ZEW Discussion Papers 13-063, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  2. FRANK VERBOVEN & THEON van DIJK, 2009. "CARTEL DAMAGES CLAIMS AND THE PASSING-ON DEFENSE -super-* ," Journal of Industrial Economics, Wiley Blackwell, vol. 57(3), pages 457-491, 09.
  3. Leonardo J. Basso & Thomas W. Ross, 2010. "Measuring The True Harm From Price‐Fixing To Both Direct And Indirect Purchasers," Journal of Industrial Economics, Wiley Blackwell, vol. 58(4), pages 895-927, December.
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