Due to years of experience in numerous cartel cases, we have extensive knowledge in the analysis of cartel infringement. We have completed surveys on the extent of cartel-related price increases for a variety of compensatory and punitive damage cases. In such cases, it is evident that vague suspicions almost always lead to unsatisfactory results and that only sophisticated economic analysis can serve as a reliable foundation for successful compensatory and punitive damages.
Because the amount of penalty charges is dependent on the severity of the violation, it is of critical importance to determine not only the functioning of a cartel but also the effects of a cartel on competition (price fixing in particular). Alongside the primary damage analysis, the study of surveys undertaken by the opposing party plays an important role. In this way we make a valuable contribution to the tactical positioning of our client in compensatory damage cases.
Cartels can shrink and distort competition in a variety of ways. The number of potentially involved parties is large: not only end-customers, but also brokers, subcontractors, suppliers and manufacturers of complementary goods may be affected if a cartel-related price increase makes its way down the various levels of the market. Yet it is precisely upon the action of proving indirect cartel damages that courts place such exacting requirements. These requirements call for a precise understanding of market correlations and cartel mechanisms.
In the process of identifying such “passing-on effects” our many years of experience analysing numerous markets in the fields of investment, production and consumer goods and service providers are particularly advantageous.
When dealing with the German courts, slow drawn-out proceedings are generally the norm. Therefore it may be advantageous to process claims for damage compensation out of court.
In 2011 we were commissioned as a neutral, extrajudicial competition-economics surveyor by claimants against and members of the fire engine cartel, not only to estimate necessary damages, but also to develop a proposal for regulation. This we put forward on the basis of bargaining-theory models. Our approach was of decisive importance for the acceptance of a compensation solution and served as a pilot project in Germany.
Particularly in markets with mutually alternating dependencies, it can be worthwhile arranging for an investigation into the origin and amount of damages by a neutral surveyor agreed upon by all parties involved in order to reach an extrajudicial settlement.
Anyone who regularly invites for tenders for orders and is active in markets of different suppliers runs the risk of suffering damages due to cartel activity. Within the framework of an institutionalised and proactive functioning monitoring mechanism, the company in question can identify any potential for damages in advance and develop appropriate codes of conduct where applicable.
To this end we offer our clients an economic-based analysis of supplier markets in order to estimate the intensity of competition as well as any specific cartel-related risks. Optimised contract designs, combined with the adjusted procurement procedures, significantly impedes cartelization among suppliers and minimizes the efficacy of anticompetitive arrangements to a great extent. For this purpose, close coordination with in-house lawyers and legal practices is vital.
Alongside the prevention of cartel-related damages, it is also possible to detect existing cartels on the suppliers’ side. In such cases, various economic factors point to the existence of cartel arrangements and their effects.
In the process of identifying potential cartels, we pursue qualitative, as well as quantitative, analytical approaches. Market data can be analysed with regard to conspicuous price and margin developments or bidding patterns by making use of econometric techniques and structural break analyses. The results of our studies form the basis for legal or extrajudicial measures regarding damage compensation.
In cartel cases involving compensatory or punitive damages, it is regularly questioned whether and to what extent a cartel has increased prices. For this purpose there exists a series of established methods, which we have applied in a multitude of cases: