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Monopolistic competitionPerfect competition Estimation of structural models of competition Two-model estimation Auctions Cost plus Bottom-up costing the longer the cartel's duration and the greater its geographic area.4 The court thus concluded that prices in the cartel were likely to be higher than in a competitive market. Insights into pass-on of overchargesThis insight focuses on how to quantify pass-on.It does not address the extensive policy debates surrounding pass-on, such as whether the passing-on defence should be allowed; nor does it comment on the legal question of who bears the burden of proof in relation to pass-on.Economic theory has identified certain relationships between cost changes (such as changes in input prices) and price changes.In essence, these relationships follow from the standard models of competition, oligopoly and monopoly in which there is a certain relationship between price and (marginal) cost.On this basis, the report describes several insights from economic theory regarding the likely pass-on rate in various market situations.A distinction must be made between firm-specific and industry-wide cost increases.Under the conditions of perfect competition, an overcharge that affects all competitors in a downstream market (industry-wide) would be passed on in full.This result (which can seem counterintuitive) simply follows from the fact that, under perfect competition, prices equal marginal costs in equilibrium.In contrast, for a cost increase that affects only one, or some, of the competitors in the market, the expected pass-on rate would be 0%, since those competitors that do not face the increase can leave their prices unchanged.This may also be the case if, for example, an entire industry is affected by the overcharge but that industry competes with another industry that uses a different upstream input not subject to the overcharge and that can therefore leave its prices unchanged.Quantifying antitrust damages xii expert in a damages action pooling across all estimates), or where multiple forecasters are all attempting to estimate the same value for the same purpose (eg, a group of courtappointed experts).Overall, the conclusion is that a range of methods and models can in principle be used for estimating the various types of damage that might result from antitrust infringements.The choice of approach will depend on the details of each case, and, in particular, on the availability and quality of data and information, and the basis of the counterfactual.In any given case, it may well be possible to apply more than one approach.The primary focus in any particular case would normally be on whether specific methods or models have been applied reasonably and robustly to the case at hand.The court can then either identify a preferred model for the case, or 'pool' a selection of reasonable and robust model results to arrive at a final damages value.15 For example, in England and Wales, of the 11 damages cases brought before the Competition Appeal Tribunal under sections 47A and 47B of the Competition Act 1998, at least five have been expressly settled: (i) Healthcare at Home v Genzyme Limited, Case 1060/5/7/06; (ii) The Consumers Association v JJB Sports PLC, Case 1078/7/9/07; (iii) ME Burgess, JJ Burgess and SJ Burgess (trading as JJ Burgess & Sons) v W Austin & Sons (Stevenage) Limited and Harwood Park Crematorium Limited, Case 1088/5/7/07; (iv) NJ and DM Wilson v Lancing College Limited, Case 1108/5/7/08; and (v) Freightliner Limited v EWS, Case 1105/5/7/08.Moreover, at least two other cases are likely to have been settled pursuant to a defendants' consent order: (1) BCL Old Co Limited (2) DFL Old Co Limited (3) PFF Old Co Limited v (1) Aventis SA (2) Rhodia Limited (3) F Hoffman-La Roche AG (4) Roche Products Limited, Case 1028/5/7/04; and Deans Foods Limited v (1) Roche Products Limited (2) F Hoffman-La Roche AG (3) Aventis SA, Case 1029/5/7/04.See also Rodger (2008).16 See European Commission (2008b), p. 60, and (2008a), p. 7.
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