Time is Money How Much Money is Time? Interest and Inflation in Competition Law Actions for Damages

Abstract

Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar.Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW. Abstract Public and private action against cartels is an internationally recognized cornerstone of antitrust enforcement. Effective private enforcement requires that cartel victims can receive (at least) full compensation for the harm suffered. Academics and competition authorities support this goal with guidance for the calculation of cartel damages. However, they usually neglect that the prosecution of competition law infringements can be very time-consuming, so that it often takes several years until cartel victims obtain damages. Interest and inflation are thus two key drivers of adequate compensation. This paper is the first to provide a comparative law and economics perspective on this topic: We investigate how various legal systems treat interest and inflation as part of competition law actions for damages, and, using real-world data from the lysine cartel, simulate the economic differences, which turn out to be substantial. By comparing and evaluating the regulatory techniques, our paper provides important insights for regulators, litigation practitioners and the ongoing reform discussions in the EU and the US. At the same time, our approach is a first step towards a quantitative comparative law and economics analysis of the law on interest in the field of tort law. TIME IS MONEY -HOW MUCH MONEY IS TIME? INTEREST AND INFLATION IN COMPETITION LAW ACTIONS FOR DAMAGES

The Appeals Process in the European Commission's Cartel Cases: An Empirical Assessment

“…Second, Table reveals significantly lower appeal probabilities for firms that are located in the United Kingdom, contradicting our hypothesis that the aim of delaying private enforcement actions may motivate firms to file appeals. One explanation for this unexpected outcome can be seen in the fact that—according to the U.K. rules on interest and inflation for cartel damages—the damages amount will inevitably increase over time from the occurrence of the loss (i.e., the cartel period) onward, rather than the point in time at which the public case is eventually closed (for a detailed assessment, see Bueren et al ). In other words, delaying cartel damage claims in the United Kingdom would increase the final damages amount and, as a consequence, only firms in financial trouble may have elevated incentives to postpone the respective fine payments as far into the future as possible through the filing of an appeal…”