The Overcharge as a Measure for Antitrust Damages
35 Pages Posted: 16 Apr 2009 Last revised: 30 Mar 2011
Date Written: August 12, 2009
Victims of antitrust violations can recover damages in court. Yet, the quantification of antitrust damages and to whom they accrue is often complex. An illegal price increase somewhere in the chain of production percolates through to the other layers in a ripple of partial pass-ons. The resulting reductions in sales and input demands lead to additional harm to both downstream (in)direct purchasers and upstream suppliers. Nevertheless, U.S. civil antitrust litigation is almost exclusively concerned with direct purchaser claims for (treble) damages calculated on the basis of the overcharge. Similar best practice rules are emerging in Europe. In this paper, we show that there is no structural relationship between the direct purchaser overcharge and the true harm inflicted by an antitrust violation on all of the direct and indirect purchasers and sellers in the chain of production.
Keywords: Antitrust, damages, pass-on, overcharge
JEL Classification: C13, D43, L41
Suggested Citation: Suggested Citation