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13 J. Legal Analysis 1 (2021)

handle is hein.journals/jlegan13 and id is 1 raw text is: THE BEST OF BOTH WORLDS: COMPENSATION VIA PRICE-CAPS FOR PASSED-ON OVERCHARGES Barak Yarkoni*, Roy Shalem** and Sharon Hannest ABSTRACT We present a market-based compensation approach to antitrust litigation and other cases of price overcharges. Instead of lump-sum compensation, paid either directly or through coupons, defendants are required to lower their prices for a certain desig- nated period, i.e. price-cap compensation (PCC). We show why previous criticism of PCC was misguided. And, in sharp contrast to the common view in the literature, implementing PCC may have many substantive and procedural advantages. Importantly, although PCC is implemented vis-a-vis direct purchasers only, it reconciles the U.S. and European Union legal approaches and solves the challenge of passed-on damages to indirect purchasers. 1. INTRODUCTION Antitrust litigation produces much compensation, but actual end consumers enjoy merely a sliver of the funds. The average compensation generated by a federal antitrust class action is roughly $60 million (Fitzpatrick 2010). The larg- est forty antitrust reported cases from 1990 to 2008, generated a total compen- sation of approximately $20 billion in cash alone (Lande & Davis 2008a). However, out of the total amount, the vast majority of the relief, $13 billion, was recovered by direct purchasers and not indirect ones or final consumers. Merely 10 percent of the pot went to end consumers (with the balance recov- ered by competitors). Thus, the surprising reality is that although antitrust law * Tel Aviv University, the Zvi Meitar Center for Advanced Legal Studies; the Raymond Ackerman Family Chair in Israeli Corporate Governance, Bar-Ilan University, Israel ** Tel Aviv University, Department of Economics, Tel-Aviv, Israel. t Dean and Professor of Law, Tel Aviv University Faculty of Law. Email: shannes@tauex.tau.ac.il For helpful comments we are grateful to David Gilo, Alon Klement, Tal Eyal-Boger and the partici- pants at the European Association of Law and Economics 2019 Annual Meeting. © The Author(s) 2021. Published by Oxford University Press on behalf of The John M. Olin Center for Law, Economics and Business at Harvard Law School. This is an Open Access article distributed under the terms of the Creative Commons Attribution Non-Commercial License (http://creativecommons.org/licenses/by-nc/4.0/), which permits non-commercial re-use, distribution, and reproduction in any medium, provided the original work is properly cited. For commercial re-use, please contact journals.permissions@oup.com doi:10.1093/jla/laaa009

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