Christopher Pickard has published an article in the ICLG Competition Litigation Laws and Regulations Journal. He explores four important challenges that may be encountered when quantifying a claimant’s interest losses:

Firstly, in some markets there may be delays between when firms incur costs and when they seek to recover these costs from customers. This can introduce a delay between when an overcharge is incurred and when any resulting increase in prices occurs.

Secondly, there is a range of possibilities as to what the claimant would have done if it had not needed to pay the overcharge, and these possibilities all imply different rates of interest.

Thirdly, even if it is possible to identify what a claimant would have done had it not needed to pay the overcharge, its other financing costs may have been affected if it would have acted differently. Here, Christopher discusses the Modigliani-Miller theorem, which is a theoretical proposition that implies that, if financial markets work perfectly, some of these challenges can be avoided because, regardless of how an overcharge is funded, the appropriate rate of interest will be a firm’s average cost of funds (the weighted average cost of capital or WACC).

– Finally, there is an interaction between the choice of the appropriate rate of interest with the assessment of pass-on.

The full report article can be found here.