## Outline Damage Analysis

The damages analysis comprises three key steps:

- Calculate but-for prices, i.e. the prices which would have prevailed in the absence of the cartel
- Estimate damages, i.e. the overcharge paid on trucks purchased by the claimants and inflated payments on leases or other contractual arrangements, where applicable
- Estimate pass-through of damages, where relevant

## Historical Prices

## But-for Price Analysis

Using historical prices and truck specification data, we can estimate the effect of the cartel on the price of any truck. Regression analysis allows us to express the observed price (P) as a function of a number of factors which would affect price, such as the manufacturer, engine size, the costs of production, including a variable to indicate the years of the cartel, as follows:

P = α + β1 Engine_Size + β2_Manufacturer + … + β3_Production_Cost + β4_Cartel_Period + ε

Using the regression above, it is possible to estimate the impact of the cartel on the price of trucks during the cartel period. The effect of the cartel is then subtracted from the observed price in order to determine the but-for price. In the illustrative chart below, the difference between the actual price (in red) and the but-for price (in blue) represents the price effect of the cartel.

## Damages Estimation

Damages can be direct (outright purchases) or indirect (e.g. leases). For outright purchases, the but-for price is subtracted from the actual price of each individual truck in the claimant’s fleet at the time that it was purchased in order to obtain a total overcharge. Direct damages are then calculated as the overcharge on each truck, multiplied by quantity purchased.

In the case of indirect purchases – e.g. financial lease, hire purchase or operational lease arrangements – interest and other payments are higher than they would have been since they are based on an inflated notional amount. Using the estimated but-for prices, each component of the lease payment can be recalculated based on this new, lower notional. Indirect damages are therefore the difference between the sum of original lease payments and the sum of lease payments based on the but-for price, multiplied by the number of lease agreements entered into. It is also possible that the claimant may have passed on some of the price increases to their own customers downstream. In this case, the extent of the pass-though can be calculated using regression analysis and subtracted from the final damages analysis.