Estimating Consumer Damages in Cartel Cases

24 Pages Posted: 30 Sep 2013  

Ulrich Laitenberger

Centre for European Economic Research (ZEW); KU Leuven - Department of Managerial Economics, Strategy, and Innovation

Florian Smuda

Centre for European Economic Research (ZEW)

Date Written: September 16, 2013

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.

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

JEL Classification: L13, L41, L44

Suggested Citation

Laitenberger, Ulrich and Smuda, Florian, Estimating Consumer Damages in Cartel Cases (September 16, 2013). ZEW - Centre for European Economic Research Discussion Paper No. 13-069. Available at SSRN: https://ssrn.com/abstract=2333598 or http://dx.doi.org/10.2139/ssrn.2333598

Ulrich Laitenberger (Contact Author)

Centre for European Economic Research (ZEW) ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

KU Leuven - Department of Managerial Economics, Strategy, and Innovation ( email )

Naamsestraat 69 bus 3500
Leuven, 3000
Belgium

Florian Smuda

Centre for European Economic Research (ZEW) ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

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