§5.1.1.3 The difference-in-differences approach

(95) From an economic point of view, the most accurate method of the comparator-based methods is the one that combines the before-during-after approach and the cross-sectional approach. This method is the difference-in-differences approach (86). It focuses on the development of the relevant economic variable in the market affected by the passing-on during a certain period (difference over time in the passing-on market) and compares it to the development of the same variable during the same time period in an unaffected comparator market (for instance in another geographical market). (96) Box 7 illustrates the difference-in-differences approach. Box 7 Illustration of the difference-in-differences approach (97) Assuming, in a case on which Box 5 and Box 6 are based, car manufacturer C1 in Member State 1 (the indirect purchaser) claims damages from the copper manufacturer A1 (the infringer). As explained in paragraph 8, any harm that C1 suffers stems from the passing-on of overcharges from the wire harnesses supplier B1. Using a difference-in-differences approach would involve an assessment of the development of the price paid by the car manufacturer C1 in Member State 1 (the market with a passing-on related price effect) during a certain period, and comparing it to the development of the price paid by the car manufacturer C2 in Member State 2 (unaffected by the infringement and hence with no passing-on related price effects) in the same time period. The comparison shows the difference between these two differences over time. This provides an estimate of the change in the price paid by the car manufacturer, excluding all those factors that affected the markets both in Member State 1 and Member State 2 in the same way. Hence, the method isolates the passing-on related price effect from other influences on the price of wire harnesses common to both markets. (98) Another variation of the case, which Box 6 and Box 7 are based on, may illustrate the method. Assuming that a before-during-after comparison reveals an increase in the unit price of wire harnesses of EUR 100 in the Member State 1 (where the infringement and passing-on occurred) between 2005 and 2010. An analysis of the unaffected market in Member State 2 over the same period may show that the unit price of wire harnesses has increased by only EUR 10, due to an increase in another input cost, e.g. plastic. Assuming that the higher input cost (of plastic) also concerned Member State 1, and provided that all other conditions are the same, a comparison of the different development of prices on wire harnesses in Member States 1 and 2 would indicate the price increase caused by the passing-on effect. In the example, this would be EUR 90. (99) Therefore, a significant strength of the difference-in-differences approach is that it can filter out changes unrelated to the passing-on related price effect that occurred during the same period as the passing-on. However, it rests on the assumption that other factors, in the example above the price of plastic, affect the markets similarly. If this is not the case, an econometric implementation of the difference-in-differences technique may be necessary. Implementations of such techniques are described in more detail in section 5.1.2 below.

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