Publication of the CNMC Guide for the quantification of damages

Recently, the National Commission for Markets and Competition (CNMC) has published the Guide on the quantification of damages for competition law infringements[1] (hereinafter "the Guide"). This Guide arises from the need to guide all parties involved and judges in the quantification of damages in private competition law enforcement proceedings.

Previously, two drafts of the Guide were launched for public consultation, the first in July 2021 and the second in September 2022[2]. Different interested parties have participated in this consultation, from economists, associations, regional competition authorities, magistrates, scholars and individuals.

The purpose of the Guide is to bring technical economic and econometric concepts closer to judges, lawyers, experts and the general public. The Guide includes (i) a compilation of guidelines from different manuals and guides on the subject, (ii) recommendations for the preparation of expert reports to be used as evidence, (iii) a list of checks to facilitate the evaluation of the reliability of the results contained in the reports, (iv) a glossary with the main technical concepts of economics and econometrics as a tool for understanding an expert report, and (v) the proposal of a detailed practical fictitious exercise.

First, the Guide develops in a generic way the types of anticompetitive conduct and the parties or agents that may be affected by them, the means available to the parties to access information to support the claim and the possibility that the damage has been passed on (in whole or in part) to indirect purchasers (passing on).

Next, the Guide develops the content and requirements of the expert's report. It highlights the importance that the Guide gives to the expert report, not only to quantify the damage derived from the infringement, but also to prove the existence of this damage and the causal relationship between the damage and the infringement. The CNMC stresses that the common denominator of the expert reports should be to demonstrate the rigor of the quantification.

As a prior step to developing a quantification method, the Guide highlights the desirable characteristics of any expert report (completeness, transparency and consistency), the need for a thorough knowledge of the sector and market affected, the approach of the theory of harm (i.e., describing how the infringement could have generated the damage or the possible absence of damage) and the design of the scenario in the absence of the infringement (counterfactual).

The expert is then required to determine what data (public or private) he needs for the construction of his database and from this the relevant variables for his analysis (depending on the type of conduct, the variables for quantification will be prices, sales volume, business margins or profits). Once this data has been collected, the most suitable techniques and methods for quantification will be established.

Likewise, the Guide includes the most common quantification methods in the field, being very similar to those described in Oxera (2009)[3] or the Practical Guide of the European Commission (2013)[4] and highlights that using the conclusions of statistical studies analyzing past cartels to claim compensation can lead to significant errors, since these studies do not take into account the particularities of the specific case.

Finally, it includes a list of checks to evaluate the initial approaches, the data collected and the results presented in the expert reports, providing clues for the detection of errors or possible methodological deficiencies.