Policy Choices in Defining the Measure of Antitrust Damages

Abstract:     
An EC Green Paper in 2005 asked for comments on an array of possible reform measures aimed at encouraging private antitrust damage actions in the national courts of the EC’s member states. One of the questions the Green Paper raised was “how should damages be defined?” Should they be measured by “the loss suffered by the claimant as a result of the infringing behaviour” or by “the illegal gain made by the infringer:” should courts be able to award “[d]ouble damages for horizontal cartels” automatically, conditionally, or at the courts’ discretion; and should prejudgment interest should be permitted “from the date of the infringement or date of the injury.” In this short paper, presented at an OECD Working Party in 2006 and published recently, I examine the issues raised by this section of the Green Paper from the perspective of the American experience over a century of private antitrust litigation. I begin with a brief history of the American treble damage remedy. In part II, I describe the theoretical measure of an optimal antitrust penalty. In part III, I show how the model of the optimal penalty can influence choices that affect the measure of damages. In part IV, I draw on the earlier discussion to respond to the Green Paper’s questions.

Number of Pages in PDF File: 13

Keywords: antitrust, damages, competition, optimal penalties

JEL Classification: K21, K41, L40

Accepted Paper Series