Don’t toss a coin over cartel damages

This is the warning Copenhagen Economics issues to all parties in the damage claim cases following the Swedish asphalt cartel in the leading Swedish business paper “Dagens Industri”. In Denmark, a cartel damages case was recently settled and we are concerned that the lack of economic evidence in the Danish case may also surface in the Swedish damage claims proceedings. Without economic support the parties expose themselves to unnecessary large risks. To assess the damage, the actual price paid should be compared with the price that would have prevailed in the absence of the cartel. To estimate this price is no trivial matter. But far from impossible. In the Danish case, one claim was that the price before the cartel was the relevant comparison price. Another, that the price after the cartel was the correct non-collusive price. Economic theory cannot decide which of these claims are true. Thus the court was left to make an arbitrary decision. There are however several economic techniques that could have been used to assess the claims. Using them could have changed the outcome. In order not to face the same coin-tossing scenario in the Swedish proceedings, we advise all parties in the damage claims cases to do their homework thoroughly, for the sake of both the consumers and the shareholders. Further information: Dr Claus Kastberg Nielsen

Denmark close to being European Competition Champion
This is the conclusion reached by Copenhagen Economics in a recent comment in the leading Danish business newspaper ‘Børsen’. The comment has been prompted by the release of the bi-annual report from the Danish Economic Council in November 2005. The report thoroughly discusses the state of competition in Denmark and calculates the gain in economic welfare Denmark could achieve if competition was as intense as in the United States. According to the Council, the welfare gain would be an astonishing 30 billion DKK. However, if these calculations are true and correct, Danes should be pleased by the fact that, in a European perspective, Denmark is probably the best among equals. The background study used by the Economic Council reveals that if competition in Denmark would be similar to Euro-land (an aggregation of Italy, France and Germany) then Denmark would experience a massive welfare loss. Why? Because competition is much more intense in Denmark than in Euro-land. For the Economic Council, this must be eye-opening as the Council previously repeatedly has concluded that competition in Denmark is weaker than in the rest of EU. Further information: Dr Claus Kastberg Nielsen See the comment in Danish
Copenhagen Economics Model reveals economics of anti-dumping
Anti-dumping measures are the most commonly invoked trade defence instrument in the EU, but they are only allowed when the interest of the Community as a whole calls for intervention. In order to highlight this sometimes briefly treated requirement, the Danish government commissioned Copenhagen Economics, in co-operation with Professor Joseph Francois, to develop an operational tool for economic impact assessments of anti-dumping measures. The resulting Copenhagen Anti-Dumping model allows for transparent and efficient analysis of the costs and benefits of imposing anti-dumping measures for individual Member States and for the Community as a whole. Application of the model to four recent anti-dumping cases reveals that the economics of anti-dumping measures are less favourable than commonly assumed in investigations. Further information: Mr Martin Hvidt Thelle Read the report online
Swiss services liberalisation; economic effects
Services play a significant role in modern economies, but regulatory barriers to services provision are often impeding the provision of services thereby preventing full exploitation of the economic potential. In a study prepared for the Swiss State Secretary for Economic Affairs (SECO), Copenhagen Economics shows that Switzerland can expect an increase in economic activity of up to 2 % in case of services liberalisation. For more information see the press release from SECO Further information: Mr Christian Jervelund Read the full report
TINE challenges the Norwegian competition authority
The Norwegian Competition Authority has notified dairy producer TINE that it may impose a fine of NOK 45 million (approx. € 5.8 million) for abuse of dominant position. In their reply to the competition authority, TINE refutes this claim. TINE argues that there is no proof of abusive behaviour and that TINE is not dominant in the relevant market. Copenhagen Economics has helped TINE define the relevant product and geographic market. The relevant market is a concept used to identify TINE's actual competitors which is a necessary first step in determining whether TINE has a dominant position. For more information, see the press release from TINE Further information: Dr Henrik Ballebye Olesen