Estimating the Pass-On Effect in Antitrust Damage Cases: Relative Strengths and Weaknesses of the ‘Comparator’ Method vs. the ‘Pass-On Rate’ Method

17 Pages Posted: 28 May 2019

Date Written: April 30, 2019

Abstract

In this paper we compare the assumptions and information requirements of two common methods to pass-on effect estimation for the calculation of damages in cartel or abuse of dominance cases: the comparator and the pass-on rate methods. We note that the comparator method is feasible in some situations in which the pass-on rate method is not. Moreover, the comparator method may require fewer assumptions on the true (but unobservable) price mechanism. Where both methods are feasible, however, the pass-on rate method arguably requires less data and likely fewer control variables. Therefore, depending on the specific circumstances in a given case and the availability of data, each method has different strengths and weaknesses. A general preference for the comparator method as stated in the EU draft guidelines on pass-on estimation is thus not justified. To the contrary, in some arguably standard situations the lower data and control variable requirements of the pass-on rate method may imply that it is preferable to the comparator method.

Keywords: pass-on estimation, competition damages

JEL Classification: K13, C20

Suggested Citation

de la Mano, Miguel and Milde, Christopher, Estimating the Pass-On Effect in Antitrust Damage Cases: Relative Strengths and Weaknesses of the ‘Comparator’ Method vs. the ‘Pass-On Rate’ Method (April 30, 2019). Available at SSRN: https://ssrn.com/abstract=3380657 or http://dx.doi.org/10.2139/ssrn.3380657

Miguel De la Mano

Compass Lexecon ( email )

23 Square de Meeus
Bruxelles, 1000
Belgium

Christopher Milde (Contact Author)

Compass Lexecon ( email )

Friedrichstr. 88
Berlin, 10117
Germany

HOME PAGE: http://www.compasslexecon.com/professionals/bio?id=6441

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