Estimating consumer damages in cartel cases

laitenberger, ulrich ; smuda, florian;

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 percent and 6.9 percent and an overall consumer damage of about 13.2 million euros over the period from July
2004 until March 2005. Under the assumption that the cartel-induced share on
turnover is representative for the entire cartel period and for all affected markets,
the overall consumer damage would even sum up to about 315 million euros.
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 euros.With respect to the discussion whether special
procedures for bringing collective actions should be available in the EU, our
results are important in 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