In a recent article for Concurrences, Brattle Principal Pinar Bagci analyzes and critiques various damages estimation methods used in the first cartel overcharge claim brought in the UK High Court of Justice, BritNed Development Limited v. ABB AB and ABB Ltd. An October 2019 UK Court of Appeals decision has provided further context on how cartel follow-on damages should be calculated.
BritNed v. ABB determined whether the defendant – a global cartelist – overcharged for its submarine power cable services, the amount of the overcharge, and any related economic harm. Ultimately, the High Court critiqued the claimant’s “but-for” pricing model based on proxy data and sided with the defense due to its use of a simplified gross-margin analysis reflecting project-specific data. However, the court recommended a novel approach to allocating damages based on “cartel savings,” which granted both the claimant and the defendant the right to appeal.
In her article, Dr. Bagci shows that the economic analyses put forth by the claimant, defendant, and court in the initial case were all unreliable because they were not rooted in verifiable facts and had not been thoroughly tested. She further opines that the court’s reliance on cartel savings to calculate damages was unsound, since the savings had no effect on price and no relation to the harm suffered by the claimant.
Similarly, the Court of Appeal’s October 2019 judgment took issue with the High Court’s model. The panel of judges held that a damages award based on savings made by the defendant, as opposed to the loss suffered by the claimant, is predicated on an error of law and must be set aside.
Dr. Bagci’s article, “The UK High Court of Justice rejects methodology for estimating overcharges on cables based on economic evidence,” can be found below.