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Estimating Consumer Damages In Cartel Cases

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  • Ulrich Laitenberger
  • Florian Smuda

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 percent and 6.9 percent and an overall consumer damage of about 13.2 million euros over the period from July 2004 until March 2005. Under the assumption that the cartel-induced share on turnover is representative for the entire cartel period and for all affected markets, the overall consumer damage would even sum up to about 315 million euros. 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 euros. With respect to the discussion whether special procedures for bringing collective actions should be available in the EU, our results are important in 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.

Suggested Citation

  • Ulrich Laitenberger & Florian Smuda, 2015. "Estimating Consumer Damages In Cartel Cases," Journal of Competition Law and Economics, Oxford University Press, vol. 11(4), pages 955-973.
  • Handle: RePEc:oup:jcomle:v:11:y:2015:i:4:p:955-973.
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    File URL: http://hdl.handle.net/10.1093/joclec/nhv030
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    References listed on IDEAS

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    1. Bolotova, Yuliya V., 2009. "Cartel overcharges: An empirical analysis," Journal of Economic Behavior & Organization, Elsevier, vol. 70(1-2), pages 321-341, May.
    2. 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 [rev.], ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    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.
    4. 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, September.
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    Cited by:

    1. H. Peter Boswijk & Maurice J.G. Bun & Maarten Pieter Schinkel, 2016. "Cartel dating," UvA-Econometrics Working Papers 16-04, Universiteit van Amsterdam, Dept. of Econometrics.
    2. H. Peter Boswijk & Maurice J.G. Bun & Maarten Pieter Schinkel, 2016. "Cartel Dating," Tinbergen Institute Discussion Papers 16-092/VII, Tinbergen Institute.

    More about this item

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • L44 - Industrial Organization - - Antitrust Issues and Policies - - - Antitrust Policy and Public Enterprise, Nonprofit Institutions, and Professional Organizations

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