This article analyzes the role of umbrella damages when conducting damage assessment in bid-rigging cases.
When a cartel does not include all sellers in a market, it raises the possibility of buyers paying elevated prices on purchases made from non-cartel members and therefore suffering “umbrella damages” due to the cartel’s conduct. While certain jurisdictions (such as the European Union) allow plaintiffs to claim umbrella damages, it is not clear whether plaintiffs seeking umbrella damages in the U.S. have standing.
John Asker of University of California, Los Angeles, El Hadi Caoui of the University of Toronto, and Vikram Kumar and Enrico De Magistris of Cornerstone Research coauthored an article that analyzes the role of umbrella damages when conducting damage assessment in bid-rigging cases. The article explains why umbrella damages may be a consideration in certain auction formats but not others and describes the underlying economic rationale. It summarizes findings from a case study of these types of damages using data from the Texas dairy industry. It concludes with some practical considerations when assessing umbrella damages.
The article was originally published by Competition Policy International’s Antitrust Chronicle in October 2023.