§4 THE QUANTIFICATION OF PASSING-ON AND VOLUME EFFECTS — GENERAL ASPECTS

(65) Compensation for harm suffered aims at placing the injured party in the position in which it would have been had the infringement not occurred. In order to be able to assess this position, one needs to compare the observed situation, i.e. the situation in which the infringement took place, with a hypothetical situation, i.e. the situation in which the infringement did not take place. This hypothetical situation is referred to as the ‘counterfactual scenario’. (66) The purpose of building a counterfactual scenario is to isolate the effect of the infringement from other factors affecting the price of a product or service, which would have affected such a price even if the infringement had not taken place (63). For instance, an increase in demand would typically lead to a price increase even absent a cartel. Direct or indirect purchasers should not be compensated for that effect. Hence, when constructing a counterfactual scenario, it is necessary to control for factors that are not related to the infringement (64). (67) As the counterfactual scenario is hypothetical, it cannot be directly observed. As described below, different methods and techniques have been developed in economics and legal practice to establish the counterfactual. These vary in terms of the underlying assumptions and the variety of data needed. (68) While these methods seek to construct how the market would have evolved absent the infringement, direct evidence available to the parties and the court (e.g. internal documents describing how the direct purchaser has passed on the initial overcharge in a specific situation) may also provide, under applicable national legal rules, important information for assessing damages in a specific case (65). (69) When dealing with passing-on in a damages action for an infringement of competition law, national courts may have to consider three components that relate to the harm for which a direct or indirect purchaser may claim compensation, namely the overcharge, the passing-on related price effect and the passing-on related volume effect (66). National courts and economic experts may choose to estimate these three components sequentially, i.e. in a three-step procedure set out below. (70) In a first step, the overcharge may be quantified or estimated. A number of different methods can be employed to do this. However, the methods most widely used by parties and courts to estimate the initial overcharge are the so-called comparator-based methods. The different methods for estimating the overcharge are considered in detail in the Practical Guide. (71) A second step involves estimating the magnitude of the passing-on related price effect. The extent of this effect may be estimated directly by employing the comparator-based methods, i.e. similar methods as when quantifying the overcharge. If certain assumptions are fulfilled, the extent of this effect may also be estimated indirectly by obtaining an estimate of the rate at which the increase in the affected input cost should have been passed on and combining this estimate with information on the overcharge and sales. Sections 5.1 to 5.2 provide an overview of different approaches for the quantification of these effects. (72) In a third step the passing-on related volume effect is estimated. Similar to the estimation of the passing-on related price effect, the volume effect may be estimated directly or indirectly. Different approaches for quantifying these effects are considered in Sections 6.2 and 6.3. (73) Other approaches, such as a simulation approach, accounting simultaneously for passing-on related price and volume effects, may also be used to quantify the harm in damages actions before national courts for the infringement of EU competition law. The simulation approach is briefly explained in section 5.2.

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Source: EUR-Lex (Cellar) · retrieved 2026-09-07