The CNMC has recently submitted for consultation a "Guide on quantifying damages for breaches of competition". The Guide is framed in the context of the growing number of claims for damages arising from infringements of the antitrust regulations experienced after the transposition into the Spanish legal framework of Directive 2014/104 / EU of the European Union regarding the exercise of actions for damages for infringements of competition law. The Guide focuses on one of the essential elements in the determination of damage: the analysis of economic evidence on the quantification of damage.
The economic reports presented by party experts or by experts appointed by the judges constitute the basis for the quantification of the damages derived from the infractions of the antitrust regulations. However, on occasions, the judges and courts have invoked the so-called “judicial estimate of the damage”, that is, the power of the judge to determine the amount of the damage according to their own criteria and even regardless of the analysis of the expert reports, either by Well-founded reasons (such as the lack of evidence in the reports or the existence of errors in them) or due to an unjustifiably high burden of proof or the inherent complexity of the expert reports, which makes it difficult for them to interpret and evaluate them. of the judges.
In any case, the quantification of the damage caused by an infringing conduct supposes the assessment of a complex economic reality that requires a rigorous analysis of the data. The “judicial estimate of damage” sometimes ignores such complexity and adopts a simple solution disconnected from reality for a complex economic problem. As indicated in the Guide itself (p. 14), “each claim for damages is, in a certain way, unique and requires its own and specific study”. The generic quantifications of the damages do not recognize the singularity and specificity of each one of the infractions of the antitrust regulations.
In this sense, the CNMC initiative, which seeks to “assist judges”, “disseminate good practices” and “increase the technical rigor of expert reports” associated with the procedures for quantifying damages for infractions of competition law (p. 5), is a well-intentioned initiative to facilitate the exercise of Spanish judges and courts in the quantification of damages in these proceedings.
But does the CNMC Guide achieve its goal? The Guide is an exhaustive document that summarizes the main existing methodologies for the quantification of damages and identifies some of the relevant elements to evaluate such methodologies. However, there are several elements in the Guide that put the achievement of its objectives at risk.
First of all, is the Guide necessary? The European Commission already has guides in Spanish aimed at judges and courts for the quantification of damages caused by infringements of antitrust regulations and about his transfer to end customers. Therefore, the objective of the CNMC Guide seems, in principle, redundant. For the Guide to be really useful and to help facilitate the quantification of damages, the CNMC should have previously identified the shortcomings in the existing guides and have structured the Guide in order to solve such shortcomings. To do this, the CNMC should have previously consulted with the various parties to determine what problems are not solved by the existing guidelines and what kind of additional guidance could be useful. However, the CNMC has launched a document for consultation that is too similar to those already published by the EC, and still improving them in certain aspects (such as the consolidation of the two EC Guides and the identification of specific sources for the case). Spanish), the Guide does not appear to add substantial new elements to the existing EC guides.
Second, is the Guide in line with your target audience? The Guide is addressed to "Spanish judges and courts" and, although it is suitably structured and covers the main elements necessary for the quantification of damages, the excessively technical nature of the Guide is not in line with the target audience, which lacks specific training in quantitative methods. This problem has a difficult solution: on the one hand, it would be an overwhelming objective for the Guide to seek to train judges and courts in quantitative methods and; on the other, an excessive simplification could obviate relevant factors and nuances for the evaluation of the expert reports. To be useful to the target audience, the Guide could focus on identifying the essential elements that an economic report should contain and on the intuitive explanation of these elements, their interpretation and the conclusions of the reports. For that end, The Guide should adapt its tone and wording to its target audience, lowering the technical level and making abundant use of illustrative examples that improve its didactic character.. The analysis of complex technical statistical and econometric issues should not be part of a guide for judges and courts, as such issues will continue to require the intervention of experts to whom judges should be able to turn to assess them. As an example, the Guide includes an annex on econometric methods (Annex 3) that is not easy to read and understand for professionals, including economists, without training in quantitative methods. The Guide cannot and should not be intended to become a simplified manual of quantitative methods.
Third, does the Guide do its job? The objectives of the Guide, according to its own text, are “to disseminate good practices” and “to increase the technical rigor of expert reports”. In this sense, the Guide should adhere to guidelines of a methodological nature and avoid indications and categorical conclusions. Thus, the Guide itself establishes that “each claim (…) has its particularities that can only be taken into account if a specific model is designed for the claim being analyzed”. Therefore, the Guide should avoid blanket statements that do not take into account the specific context of each claim. For example, categorical statements such as that the price transfer in the case of an oligopoly is between 50% and 100% (p. 12) or that the robustness of an econometric model is evaluated by analyzing certain indicators such as the coefficient of determination (p. 21) are only true in certain circumstances. In oligopolistic markets where demand is highly concentrated, price shifting may be non-existent or a high coefficient of determination is not always synonymous with robustness. Furthermore, "recommendations" such as applying several methods simultaneously and contrasting their results (p. 14) ignore the difficulties of developing a quantification method and may induce judges and courts to raise the standard of proof.
Finally, despite the fact that the Guide insists that “each claim for damages is, in a certain way, unique and requires its own and specific study”, the inclusion of a statistical annex with descriptive data of several judgments and the appreciation that Said data on surcharges can be considered as references with which to compare the results of the estimates made (page 8 of Annex 2) could lead to using the average surcharge of such judgments as a focal point for determining damage. Although a statistical analysis of the judgments handed down in the matter of damages can constitute an interesting exercise with informative value, its inclusion in a methodological guide does not contribute to the objective of the Guide, which is to disseminate good practices and increase the technical rigor of the reports. expert witnesses. The EC guides themselves avoid such references to emphasize the need for a case-by-case analysis and avoid the use of generic references.
In summary, For the Guide to be a useful document and facilitate the quantification of damage, it should build on the work already done by the EC guides and try to solve the problems not solved by the existing guides.. This should involve prior identification of such obstacles through stakeholder consultation. Furthermore, the text and content of the Guide should be consistent with its objectives and the level of awareness of the target audience. In this sense, it should reduce its technical character, adopt an intuitive and didactic tone and illustrate the main points with practical examples, but not pretend that judges and courts are capable of interpreting and evaluating the results of a complex data analysis. Judges and courts should be able to call on independent experts to assist them in this task. The Guide should focus on methodological issues not resolved by the existing Guidelines and avoid being prescriptive.
The CNMC's work to facilitate claims for damages should not focus solely on the advice of judges and courts. The most important task of the CNMC to facilitate data claims resides in the instruction itself of the CNMC sanctioning files, in the legal and economic rigor of its resolutions and in the access to the information of the investigation. CNMC Resolutions often constitute an essential piece in establishing causality and in quantifying damages. The authority must be aware of the role of its resolutions in subsequent claims for damages and, not only must it guarantee their robustness in the face of possible remedies, but it must also include in them all the available information that facilitates the substantiation of subsequent damage actions. In addition, the non-confidential information in the file must be easily accessible to all interested parties.
The quantification of the damages generated by the infringements of the antitrust regulations is a complex exercise. The efforts of the legislator, the courts and the competition authorities to facilitate the claim and quantification of the damage are desirable, but they must have a clear objective: that the compensation of the victims is commensurate with the damage suffered. For this, it is essential that damage quantifications are based on a rigorous analysis of the data and not on mere partial indications. But not only that. The CNMC's focus should be on the robustness of its Resolutions, which are the basis for any subsequent claim for damages.
- Juan Delgado, Director of Global Economics Group- Academic Advisor of Fide
- Hector Otero, Senior Consultant at Global Economics Group
- Violeta Morón, consultant at Global Economics Group