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A Primer on Antitrust Damages

Herbert J. Hovenkamp

University of Iowa - College of Law

February 28, 2011

University of Iowa Legal Studies Research Paper

This paper considers the theory of antitrust damages and then discusses some simple models for proving them. Antitrust damages theory begins with the premise that many practices alleged to violate the antitrust laws cause no consumer harm. Others are inefficient and have few socially redeeming virtues. Still others may simultaneously increase both the efficiency of the participants and their market power. A perfectly designed antitrust policy would exonerate the first set of practices, condemn the second set, and condemn the third set only when the social cost of the restraint exceeds its social value or they produce net harm to consumers. A theory of damages based on these principles would make antitrust violations unprofitable when they are harmful but leave them alone when they are not. The actual practice of antitrust damages pursues a very different route, however. Mainly this is a consequence of Section 4 of the Clayton Act, which commands that damages be measured by plaintiff’s losses rather than alternatives that come much closer to providing appropriate levels of deterrence.

The discussion of application considers rationales for trebling, damages in overcharge cases and for exclusionary practices in competitor suits, lawsuits involving nascent plaintiffs who have no established profit record and those involving terminated firms who are no longer in business. It compares “yardstick,” “before-and-after,” and so-called “market share” methodologies. It concludes with discussions of the “disaggregation” requirement, which requires that the expert isolate those elements of damage that result from an antitrust violation and those that should appropriately be attributed to other causes, and a brief discussion of the impact of common law joint and several liability.

Number of Pages in PDF File: 59

Keywords: Antitrust, Damages, Enforcement, Antitrust Economics, Standing

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Date posted: October 2, 2010 ; Last revised: March 1, 2011

Suggested Citation

Hovenkamp, Herbert J., A Primer on Antitrust Damages (February 28, 2011). University of Iowa Legal Studies Research Paper. Available at SSRN: http://ssrn.com/abstract=1685919 or http://dx.doi.org/10.2139/ssrn.1685919

Contact Information

Herbert J. Hovenkamp (Contact Author)
University of Iowa - College of Law ( email )
407 Boyd Law Building
Iowa City, IA 52242
United States
319-335-9079 (Phone)
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