Antitrust & Competition Policy Blog

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Levin College of Law

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Wednesday, October 30, 2013

METHODS FOR QUANTIFYING ANTITRUST DAMAGES: THE PASTA CARTEL IN ITALY

Giovanni Notaro (Autorita Garante della Concorrenza e del Mercato) discusses METHODS FOR QUANTIFYING ANTITRUST DAMAGES: THE PASTA CARTEL IN ITALY. Mama mia!

ABSTRACT: This article contributes to the ongoing debate on the quantification of the damages caused by anticompetitive conduct by applying a number of empirical methods to the pasta cartel in Italy, which was discovered by the Autorità Garante della Concorrenza e del Mercato (Italian Competition Authority, or AGCM) in 2007. These methods include the dummy variable approach, the dynamic treatment effects (DTE) method, and the so-called straight-line methods. The key results show that both the dummy variable and the DTE methods perform better than the straight-line methods. Moreover, the last should not be used when the underlying cost and demand drivers over the cartel period are substantially different from those prevailing before or after. The dummy variable approach and the DTE method provide very similar estimates of the cartel overcharge, though there is no reason to expect that this would always be the case. Finally, this article contributes to the ongoing debate on “optimal fines” and on the societal benefits of having a proper antitrust enforcement by showing that that the fines levied by the AGCM in this particular case were below “optimal” levels, and that the benefits from this intervention of the AGCM are roughly seven times its annual budget.

http://lawprofessors.typepad.com/antitrustprof_blog/2013/10/methods-for-quantifying-antitrust-damages-the-pasta-cartel-in-italy.html

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