Econometric Methods for Assessing Impact in Antitrust Class Actions
James T. McClave, Ph. D. and Jamie McClave, Ph.D.
Multiple regression analysis is widely used and well-accepted for calculating damages in price-fixing antitrust litigations. Multiple regression models are used to determine whether prices were elevated by the alleged anticompetitive conduct and, if so, to quantify plaintiffs’ damages. If the case is a class action, class certification may depend on whether classwide methods exist to estimate damages and whether the challenged behavior impacted all or nearly all class members. Two standard types of models are often used to estimate the aggregate, classwide damages: forecasting and dummy variable models. We show that both model types can also be used to assess the extent of classwide impact by applying the fundamental premise of comparing actual and estimated “but-for” competitive prices.