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The effects of cartel damage compensations

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  • Hunold, Matthias

Abstract

Damage compensation claims in case of cartels are supposed to increase deterrence, compensate losses and increase efficiency. I show that such claims can instead have adverse effects: If suppliers or buyers of cartelists are compensated in proportion to the profits lost due to the cartel, expected cartel profits can increase. Claims of downstream firms against upstream cartelists who do not monopolize the market increase consumer prices. Suppliers of cartelists can be worse off when eligible to compensation. These results apply also to abuses of dominance and call for a more careful approach towards the private enforcement of competition law.

Suggested Citation

  • Hunold, Matthias, 2013. "The effects of cartel damage compensations," ZEW Discussion Papers 13-081, ZEW - Leibniz Centre for European Economic Research.
    • Handle: RePEc:zbw:zewdip:13081
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    References listed on IDEAS

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    Cited by:

    1. Katsoulacos, Yannis & Motchenkova, Evgenia & Ulph, David, 2020. "Combining cartel penalties and private damage actions: The impact on cartel prices," International Journal of Industrial Organization, Elsevier, vol. 73(C).

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    More about this item

    Keywords

    competition law; cartel damage compensation; deterrence; overcharge; private enforcement; vertical relations;
    All these keywords.

    JEL classification:

    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices

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