Wednesday, November 9, 2011
Posted by D. Daniel Sokol
Hanns A. Abele, Georg E. Kodek, and Guido K. Schaefer (all Department of Economics, WU-Vienna) discuss PROVING CAUSATION IN PRIVATE ANTITRUST CASES.
ABSTRACT: Private enforcement of antitrust damages critically hinges upon proof that an antitrust violation caused damage. Existing research narrowly focuses on the quantification of damages, but proving causation goes far beyond quantification. Strict legal requirements must be observed. To address causation adequately, an integrated legal and economic approach is necessary. Traditional tort law examines for each transaction whether an antitrust violation caused damages with near certainty. This quasi-deterministic approach offers a seemingly unequivocal solution for assessing causation. However, complicated cases such as private antitrust damages cannot be decided by this methodological approach. In contrast, economic methods for proving causation use statistical tools. Such an analysis goes beyond individual transactions and provides insights on a coherent group of similar instances. Newer concepts of stochastic causation in tort law can mend the conflict to obtain a consistent assessment of causation. Law and economics pose the same questions about causation, but they differ in their methodological approaches. To provide common ground, we develop a novel analytical framework, drawing upon research in industrial organization. This framework provides a thorough explanation of market structures' underlying antitrust violations. Thereby, statistical analyses of damages and qualitative legal analyses of causation can be put on firm, internally consistent footing.